Aswath Damodaran warns AI infrastructure boom could exceed dot-com crash
NYU Stern professor Aswath Damodaran, widely known as the "Dean of Valuation," is sounding the alarm about the current wave of AI investments, saying it could bring even bigger economic risks than the dot-com crash back in 2000-01.
Unlike that era's focus on lightweight software, today's AI surge needs massive spending on data centers, chips, and power, making it an infrastructure boom, as Damodaran puts it.
Big Tech leads debt funded expansion
A lot of this new infrastructure is being built with borrowed money. If AI companies don't deliver the profits everyone hopes for, there's a real risk of defaults and financial instability that could ripple far beyond tech stocks.
Big players like Google, Microsoft, and Amazon are leading these investments—and with global data center construction alone expected to hit nearly $3 trillion by 2028, the stakes are high.
India's growing AI sector could also feel the pinch if things slow down globally, especially for startups and new hires.
Damodaran stresses: sustainable growth is key to avoiding another big bust.