The New Dotcom 🤖

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The New Dotcom – AI Innovations and Tech Rallies Battle Fed’s Plan

Alongside the Nasdaq’s year to date rally of almost 32%, several have drawn worrisome comparisons to the Dotcom boom in 1999. After a rough second-half of the year for 1998’s stock market, the American economy was encumbered by higher interest rates and over-valued equities, but innovations in tech paved the way for a prolonged period of growth that eventually led to the infamous “Dotcom Bubble”. The bubble’s bursting had led to over three years of market and economic turmoil as investors continued to sell equities and prepare for one of the worst recessions experienced in American history. In 2023, several investors fear the similarities tech has induced in present-day markets. With strong indications depicting years of higher interest rates, tech has inversely proved to stay popular with investors due to the rise in artificial intelligence.

Automated processes and tools have seemingly created endless opportunities for businesses to transform their operations and market capture, both on the internal and external sides. Investors believe tech companies, powered with the innovations of AI products such as ChatGPT, will be able to overcome any losses of demand as they cut losses while simultaneously introducing new products and services. This is something that stands in the way of the Federal Reserve, which currently has the single initiative to decrease monetary movement across the private sector. With several persevering mega-cap tech companies, the Fed fears that stimulations in the labor and consumer markets will hinder the effectiveness of the relatively high federal funds rate. Nevertheless, the second-round of earnings from these major companies will determine whether AI truly has the potential to transform industries, or if rising costs and diminishing demand will lead the harming road for inflation to reach the desired 2% level.

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I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.

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