By Rod McNaughton
Publication Date: 2025-11-12 20:00:00
If last week’s trillion-dollar plunge in big tech stocks sounded familiar, it’s because we’ve been here before – the last time the hype about innovation quickly broke into economic reality.
As markets tumble on investor unease over rising valuations of artificial intelligence (AI) companies, commentators are asking the same question as they did during the dot-com crash 25 years ago.
Can technology really defy basic economics?
I discussed this question in my inaugural lecture at the University of Otago in August 2000, when internet stocks collapsed and hundreds of dot-coms failed.
I argued at the time that many Internet companies were “naked” because their business models were visible to everyone. They spent huge sums of money to attract customers with no credible prospect of profit.
A generation later, the same logic is driving the AI boom.
Different metrics, same story
In 2000, the Internet promised to revolutionize commerce, and success was measured…
