Expert: AI Bubble Burst Impact Will Be Less Than Internet Bubble, Tech Giants' 'Moats' Are Key

Many investors worry about the bubble risk behind the AI boom—how much impact would a burst have? Igor Pejic, a banker and author of the new guide 'Tech Wealth' for tech investors, says the impact of an AI bubble burst will be milder than the internet bubble, though it will still spread across wide areas.

The dominance of tech giants is key: Companies like Alphabet (Google's parent) and Microsoft have stronger user stickiness. Their platform-based ecosystems give them almost unlimited pricing power and an unshakable position. Additionally, these firms have sufficient cash flow and don't rely on external financing, enabling them to resist competitive shocks.

Pejic notes that while the AI bubble shares similarities with the internet bubble, today's tech giants have highly profitable core businesses. Even if AI investments fail, their stock prices won't collapse completely. For investors, holding tech giant stocks may be the safest way to participate in the AI field.