Tech & AI
Columbia Threadneedle's Paul Wick sees dot-com parallels in AI boom but no bust setup
Columbia Threadneedle's Paul Wick says heavy AI spending and higher rates echo the dot-com era, but he sees no setup for a sudden downturn or a jobs shock.
Quick Read
- Paul Wick of Columbia Threadneedle sees dot-com parallels in heavy AI data-center spending and higher rates.
- He sees no IPO rush or wave of single-day stock leaps like the late 1990s, and he says corporate AI spending still looks resilient.
- Risks he named include customers picking older models, in-house systems and price pressure from open-source rivals.
- CoreWeave shares tumbled 11.7% last week as worries about AI debt hit some infrastructure firms.
What did Paul Wick say about the AI boom?
Paul Wick is chief investor at Seligman Investments, part of Columbia Threadneedle Investments. In a Business Insider interview on Sunday, he said the AI boom echoes the dot-com era. He also said the setup for a sudden downturn or jobs shock is missing.
Why it matters: He pointed to shared traits. Companies are spending heavily on AI data centers. Interest rates and energy costs are also higher. The early 2000s boom rested on a wave of new internet companies and a huge telecom buildout.
By the numbers: The 10-year Treasury yield ended Friday at 5.00% and has climbed 82 basis points this year. That yield is the yearly interest a bond pays as a share of its price.
Why does he think this time is different?
Wick's case starts with market behavior. He sees no rush of IPOs, meaning a company's first sale of shares to the public. He also sees few of the single-day stock leaps of the late 1990s.
Late in the dot-com era, companies were bracing for cuts to technology budgets. Today, he said, corporate AI spending still looks resilient and recent tech earnings have held up.
Wick called Nvidia "extraordinarily profitable," which he said makes its support for other AI firms less alarming.
What risks did he flag?
The other side: Wick named warning signs: customers choosing older AI models, companies building systems in-house, and price pressure as open-source rivals spread.
Eric Schmidt, formerly of Google, raised a similar question about earning money from AI. He argued that free Chinese models could win users in lower-income markets.
CoreWeave (Nasdaq: CRWV), an AI infrastructure firm, recently touched a 52-week low on concerns tied to AI borrowing. Its shares tumbled 11.7% last week to $54.24, leaving them 61.2% below their 52-week high.
What about jobs, and what comes next?
What’s next: Wick called fears that AI will quickly replace human work a "little premature." He said it is unclear how entry-level roles will change. He added that skilled trades such as electricians and HVAC technicians are seeing "booming demand."
The next checkpoints are economic. The Fed announces its rate decision on Oct. 28 at 2 p.m. ET. An early estimate of third-quarter growth follows on Oct. 29, and the October jobs report arrives Nov. 6.
For readers
What it could mean for you: People whose 401(k) or IRA holds an S&P 500 or total-market index fund already own big AI-linked companies such as Nvidia, because those funds weight holdings by size. If AI spending stays firm, as Wick argues, those companies could keep supporting the funds. If customers shift to cheaper or free models, or debt strains spread beyond firms like CoreWeave, the same weighting could pass the pressure along. Higher interest rates may also weigh on nearly every holding.
Questions and answers
Is the AI boom like the dot-com bubble?
Paul Wick of Columbia Threadneedle says there are parallels, including heavy data-center spending and higher rates. He argues the market lacks the IPO rush and single-day stock leaps that marked the late 1990s.
Will AI cause a sudden wave of job losses?
Wick called fears that AI will quickly replace human work a "little premature." He said it is still unclear how entry-level roles will change.
Why did CoreWeave stock fall?
CoreWeave recently touched a 52-week low on worries tied to AI debt. Its shares tumbled 11.7% last week to $54.24.
What risks to AI companies does Paul Wick see?
Wick pointed to customers choosing older models or building systems in-house. He also flagged pricing pressure as open-source alternatives spread.
The numbers
| CoreWeave (CRWV) price | $54.24 |
|---|---|
| CoreWeave (CRWV) change | −2.46% |
| CoreWeave (CRWV) market value | $30 billion |
| CoreWeave (CRWV) 52-week high | $139.93 |
| S&P 500 change | −0.52% |
| 10-year Treasury yield | 5.00% |
Week ended Friday
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Not investment advice.
