Nobel laureate Paul Krugman draws parallels between the current AI boom and the 1990s dot-com bubble, while highlighting crucial differences. He argues that despite similarities in investor excitement and market speculation, the AI boom has more substantial technological foundations. Krugman notes that unlike the internet bubble, which saw many companies with questionable business models receive massive valuations, AI companies are developing tangible, transformative technologies. However, he warns about potential market corrections, suggesting that even if AI technology proves revolutionary, current market valuations might be unsustainable. The economist particularly criticizes Elon Musk’s xAI venture, suggesting it might need a bailout by 2025 due to overvaluation and market dynamics. Krugman emphasizes that while the internet eventually delivered on its promises after the bubble burst, it took years for realistic business models to emerge. He predicts a similar pattern with AI, where the technology’s true value will materialize over time, even if current market enthusiasm leads to short-term corrections. The key distinction he makes is that AI’s fundamental technology is more mature than internet technology was during the dot-com bubble, potentially leading to a less severe market adjustment. Nevertheless, he cautions investors about the risks of current AI valuations and the possibility of significant market corrections in the near future.