AI stocks look 'eerily similar' to the dot-com craze, warns CIO overseeing $15 billion. Invest in this 'boring' corner of the market instead.

William Edwards

Sat, Jul 5, 2025, 1:15 PM 3 min read

• AI stocks resemble the dot-com stocks in the 1990s, warns investor Richard Bernstein.

• Since ChatGPT's launch, the S&P 500 and Nasdaq 100 have soared.

• Bernstein suggests dividend stocks, like utilities, for stable, compounding returns.

The intoxicating buzz around artificial intelligence stocks over the last few years looks concerningly like the dot-com bubble, top investor Richard Bernstein warns.

The CIO at $15 billion Richard Bernstein Advisors wrote in a June 30 post that the AI trade is starting to look rich, and that it may be time for investors to turn their attention toward a more "boring" corner of the market: dividend stocks.

"Investors seem universally focused on 'AI' which seems eerily similar to the '.com' stocks of the Technology Bubble and the 'tronics' craze of the 1960s. Meanwhile, we see lots of attractive, admittedly boring, dividend-paying themes," Bernstein wrote.

Since ChatGPT hit the market in November 2022, the S&P 500 and Nasdaq 100 have risen 54% and 90%, respectively. Valuations, by some measures, have surged back toward record highs, rivaling levels seen during the dot-com bubble and the 1929 peak.

While Bernstein said he's not calling a top, trades eventually go the other way, and the best time to invest in something is when it's out of favor — not when a major rally has already occurred.

"At the beginning of a bull market when momentum and beta strategies are by definition most rewarded, investors' fears leads them to emphasize dividends and lower-beta equities," he wrote. "In later-cycle periods when dividends and lower beta become more attractive, investors' confidence leads them to risk-taking and momentum investing."

"We clearly are not at the beginning of a bull market and, as we've previously written, the profits cycle is starting to decelerate," he added.

That's why dividend stocks could be ripe for appreciation, Bernstein said. He especially likes utilities stocks, which are known for issuing dividends.

Dividends are payments that a company sends out to shareholders on a regular basis (usually quarterly), and they can be used by investors as income or reinvested in the stock. If reinvested, your position in the stock can compound.

When considering compounding returns, dividend stocks actually hold their own against high-flying tech stocks, Bernstein said.

"One of the easiest methods for building wealth has historically been the power of compounding dividends. Compounding dividends is boring as all get out, but it's been highly successful through time."