AI’s Future Is Bigger Than Bubble Fears

I was managing money during the dot-com boom, and things got crazy… 

Investors poured money into companies that barely had customers. Growing losses were brushed aside as the cost of rapid growth. 

The internet was changing everything, so almost any stock price seemed reasonable.

Pets.com captured the madness with its famous sock puppet mascot. Its ads made the brand famous, but fame could not pay the bills. 

Just 268 days after going public, the company announced plans to liquidate. Its shares had fallen 98% from their IPO price.

Investors were right about the technology, but many were wrong about the investment.

That lesson stays with me as AI captures Wall Street’s attention. 

I see enormous opportunities for American businesses and their shareholders. But excitement cannot turn a weak business into a strong investment. 

Even a great business needs a price worth paying.

In a recent Wall Street Journal article, Jonathan Weil described how booms weaken when fresh financing disappears. I saw that danger unfold during the dot-com years.

A business can keep losing money while investors keep writing checks. When those checks stop, the company must survive on what customers pay. If that money can’t cover expenses, management faces some painful choices.

A rising stock price does not fix that problem. Neither does a bold forecast about a huge future market.

Young companies often need money to develop products before profits arrive. But we need evidence that customers will eventually support the business. We must understand how much money it needs before reaching that point.

I cannot predict when enthusiasm for AI stocks will fade. I can study whether a company depends on that enthusiasm to survive.

I would rather own a business customers support with their wallets.

At American Prosperity Research, we begin with the business behind the stock. We study its customers, competitive strengths, management, and cash-generating ability. 

Then we determine what we are willing to pay.

An AI label earns no special treatment in that process. We want to understand why customers buy and why they return.

Some companies enter this race with enormous resources already coming through the door. 

During the twelve months ended June 30, 2026, Alphabet generated about $186 billion in operating cash flow. Microsoft produced about $183 billion, while Meta generated about $130 billion.

That cash does not guarantee every AI project will succeed. 

Their existing businesses generate cash to help fund that investment. Startups losing money often depend on investors writing another check. That matters when we compare them with startups funding continued losses.

We examine equipment suppliers with the same care and discipline. A big order deserves attention, but the customer must be able to pay. We want sales that turn into lasting profits and cash.

Even then, the stock price can make or break the investment. Paying too much for a great business can leave you with disappointing returns. 

Our estimates must allow for slower growth, stronger competition, and higher costs.

My confidence in America does not require every AI company to succeed. Our prosperity grows when businesses find better ways to serve customers. 

AI offers tools that could cut waste and help employees accomplish more.

That opportunity reaches far beyond the companies developing the technology. Established businesses can use AI to improve products and strengthen profits. Their shareholders can benefit as those improvements make the business more valuable.

That is the opportunity we pursue at American Prosperity Research. We want capable leaders turning useful ideas into results customers will pay for.

Some companies will disappoint, and some stocks will fall sharply. When a business remains strong, a falling stock price can create an opportunity. 

We keep doing our research so we are ready to act.

Managing money through past booms taught me to respect both opportunity and price. I remain bullish on America because its businesses keep finding ways to grow. 

At American Prosperity Research, we look for great businesses that let us share in that growth. Buying at sensible prices gives us a stronger foundation for building wealth.

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Regards,

Charles Mizrahi
Prosperity Insider