Dan Chung Declares AI Boom Stronger Than Dot-Com Bubble

UPDATE: In a bold statement, Dan Chung, CEO of Alger Funds, asserts that the current artificial intelligence (AI) boom is not a bubble but a legitimate market opportunity. As stocks tied to AI technologies continue to soar, Chung emphasizes that the momentum behind these stocks is more grounded than during the infamous dot-com bubble of the late 1990s.

Chung, who experienced the tech crash firsthand as a senior analyst during that era, warns investors to recognize the significant differences in the current market dynamics. “We are still in the middle stages of the boom,” Chung stated, urging investors not to miss potential gains in the coming months.

Alger Funds, managing a staggering $33 billion in assets, has seen its Alger 35 ETF rise by 51.83% over the past year, significantly outpacing the 22.87% growth of the Morningstar US Large-Mid Broad Growth Index. Chung’s confidence stems from a thorough analysis of market fundamentals, valuations, and the broader economic environment.

In a recent interview, Chung outlined his perspective on the AI market, noting that stocks associated with AI have shown tremendous momentum without yet reaching the euphoric levels of 1998-1999. He highlighted the importance of focusing on the fundamentals of leading companies, including Nvidia, Microsoft, and Amazon, which collectively dominate the AI landscape today.

Chung compared today’s tech giants to their predecessors from the dot-com era, stating, “Companies like Microsoft are performing better than they did at the height of the dot-com bubble.” He pointed out that Microsoft’s current price-to-earnings (P/E) ratio stands at 32, far below the 67-70 times earnings it commanded during the late 1990s.

When questioned about the concerns surrounding AI investments, Chung acknowledged the heavy capital expenditures by major players and the uncertainty of returns on these investments. “We’re very early in this AI journey,” he remarked, emphasizing the vast potential for growth and productivity enhancements across a range of industries.

Chung also shared insights on specific stocks to watch, reiterating his bullish stance on Nvidia, whose earnings are projected to grow by 65% this year. He identified Nebius, an emerging AI data center company, as a key player with potential for explosive growth, anticipating revenues to jump from $500 million in 2025 to over $2.5 billion by 2026.

As the AI market continues to evolve, Chung urges investors to remain engaged and informed. “The market for AI technology could reach $2 trillion-$3 trillion by 2030,” he stated, echoing the sentiments of industry leaders.

With AI technology poised to transform various sectors, Chung’s insights offer a compelling case for investors to reconsider their strategies in this thriving landscape. Investors are advised to keep a close watch on both market movements and the evolving narratives surrounding AI as it shapes the future of the economy.

This is a developing story, and updates will follow as more information becomes available.