AI stocks in bubble zone, valuations mirror 1999-2000 dot-com mania: Manish Chokhani warns

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Veteran investor Manish Chokhani, Director at Enam Holdings, has issued a sharp warning on the global AI rally, saying valuations of major AI and semiconductor companies resemble the 1999-2000 dot-com bubble, even as the technology itself is transformational. Speaking to CNBC-TV18, Chokhani said the market is behaving exactly as it did during the build-up to the internet boom, when capital chased infrastructure creators rather than long-term winners. “It reminds me of the time when your channel started, during the 1999-2000 euphoric period. Telecom companies built the backbone, and at some point the market realised the capex didn’t justify the returns,” he said. Chokhani pointed out that while AI will fundamentally reshape businesses, stock prices may not reflect that reality. “Someone paying a $5 trillion valuation for what is essentially a capital goods stock is odd. Chips degrade in 3-5 years. This capex cycle cannot continue at this pace,” he said, referring to runaway valuations of semiconductor companies. He added that history offers a clear warning: the NASDAQ took 12 years to reclaim its dot-com peak after the bubble burst. “Excesses in valuation often take decades to correct. Even Infosys didn’t cross its 2001 peak for almost a decade.” The bubble, he believes, is already visible in the frenzy surrounding companies linked to AI infrastructure. “The craziness around OpenAI valuations and new entrants like Google pushing aggressively into chips show we are in bubble-like territory. Typically, demand falls suddenly—everyone wakes up at the same time and stops spending.” But Chokhani stressed that while stock prices may crack, the technology wave itself will be durable. “AI is here—and it’s transformational. But not necessarily for the stock prices of many AI companies.” Instead, he believes the real beneficiaries will be sectors that use AI at scale. “Just like the internet era—where financial services, healthcare, and retail became winners—the second derivative plays will gain the most. Jio invested massively in broadband, but companies like Zerodha, Groww and Zomato made the real returns.” Chokhani said investors should avoid chasing hype and instead identify businesses that can harness AI productivity to drive profitability. “The way to play AI is through the users—those serving consumers—not necessarily the capital providers.”Below is the verbat...

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