AI Mania Echoes Dot-Com Euphoria, Valuations Look Unsustainable: Manish Chokhani Sounds Caution<\/p>\n
In a striking cautionary note for global equity markets, veteran investor Manish Chokhani, Director at Enam Holdings, has warned that the current wave of investor enthusiasm around artificial intelligence (AI) has pushed valuations of major chipmakers and tech giants into the \u201cbubble zone.\u201d Drawing parallels with the 1999\u20132000 dot-com mania, Chokhani said the present AI rally exhibits the same signs of speculative excess, even though the technology itself remains transformational.<\/p>\n
Speaking to CNBC-TV18, Chokhani remarked that market behaviour today mirrors the euphoric sentiment that preceded the internet bubble. \u201cIt reminds me of the 1999\u20132000 period\u2026 Telecom companies built the backbone, but the market later realised the capex didn\u2019t justify the returns,\u201d he said.<\/p>\n
Chokhani\u2019s warning stems from the staggering valuations assigned to semiconductor and AI infrastructure companies\u2014valuations he says are \u201cfar beyond fundamentals.\u201d He questioned the logic behind paying $5 trillion for what he described as a \u201ccapital goods stock,\u201d arguing that chip inventories degrade within three to five years and cannot sustain the exponential capex cycle currently underway.<\/p>\n
He cited history as an important lesson:
\u201cThe NASDAQ took 12 years to reclaim its dot-com peak. Excesses in valuation often take decades to correct.\u201d
Even market favourite Infosys, he noted, didn\u2019t exceed its 2001 high for nearly a decade.<\/p>\n
According to Chokhani, signs of speculative frenzy are unmistakable:<\/p>\n
sky-high valuations assigned to AI infrastructure players,<\/p>\n<\/li>\n
aggressive chip investments by new entrants like Google,<\/p>\n<\/li>\n
and what he described as the \u201ccraziness around OpenAI valuations.\u201d<\/p>\n<\/li>\n<\/ul>\n
\u201cDemand falls suddenly\u2014everyone wakes up at the same time and stops spending,\u201d he warned, adding that a 50\u201360% correction cannot be ruled out for some of the hottest AI stocks.<\/p>\n
Also Read : Younger Investors to Drive ETF Growth as Gold Demand Remains Strong in 2025: WGC<\/a><\/p>\n Despite his concerns on valuations, Chokhani was emphatic that AI as a technology is here to stay and will reshape industries much like the internet revolution. \u201cAI is here\u2014and it\u2019s transformational. But not necessarily for the stock prices of many AI companies,\u201d he said.<\/p>\n He drew another analogy from history: Similarly, Chokhani expects an \u201cAI second-derivative play\u201d to outperform in the long run. Chokhani explained this concept by citing India\u2019s digital transformation journey. While Reliance Jio built one of the world\u2019s largest broadband networks, the companies that captured disproportionate value were the new-age digital platforms\u2014Zerodha, Groww, Zomato, and others.<\/p>\n \u201cYou need to think in terms of the second derivative: where is this ball going?\u201d he emphasised, suggesting that the next big profits may come from Indian industries that deploy AI to improve productivity, margins and customer experience.<\/p>\n Shifting to the Indian market outlook, Chokhani cautioned that the current muted sentiment reflects deeper concerns about economic momentum. Despite healthy GDP prints, he believes nominal growth remains subdued and inflation hovering around 2\u20133% limits earnings expansion.<\/p>\n The market, he said, has struggled to digest speculative valuations visible across pockets since September 2024, when prices \u201cwent completely off the charts.\u201d<\/p>\n He added: Foreign investors, he noted, continue to wait for clarity on both growth visibility and valuation comfort before returning aggressively to Indian equities.<\/p>\n Chokhani described the global market setup as undergoing a \u201cregime shift.\u201d While US mega-cap tech stocks have taken most of the valuation share, they have recently begun underperforming emerging markets and key commodities. He expects this divergence to continue as inflation expectations rise in developed economies, fuelling demand for commodities like gold, silver, uranium and copper.<\/p>\n He warned that India may tread water in the near term unless the country builds its own scalable tech champions and global brands, instead of relying solely on market share shifts within the domestic economy.<\/p>\n Despite his cautious tone, Chokhani sees selective opportunities emerging\u2014particularly in unloved, undervalued segments. He highlighted PSU banks as one such pocket, backed by ongoing government interest in privatisation and attractive valuations relative to the wider market.<\/p>\n He also referenced the long-term shift from tech to hard-asset themes, reflecting strong recent performance in commodities.<\/p>\n Chokhani said investors should think in terms of asymmetric growth: His message, however, remains consistent: valuation discipline matters. \u201cWhen you\u2019re buying stocks at 50x or 100x earnings, everything has to go perfectly right for you to make money.\u201d<\/p>\n AI Mania Echoes Dot-Com Euphoria, Valuations Look Unsustainable: Manish Chokhani Sounds Caution In a striking cautionary note for global equity markets, veteran investor Manish Chokhani, Director at Enam Holdings, has warned that the current wave of investor enthusiasm around artificial intelligence (AI) has pushed valuations of major chipmakers and tech giants into the \u201cbubble zone.\u201d […]<\/p>\n","protected":false},"author":4,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[615],"tags":[],"ppma_author":[1331],"class_list":{"0":"post-18785","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-stock-market-news"}," _eael_post_view_count":0,"authors":[{"term_id":1331,"user_id":4,"is_guest":0,"slug":"sourabh","display_name":"Sourabh Sharma","avatar_url":{"url":"https:\/\/trending.niftytrader.in\/wp-content\/uploads\/2025\/11\/Sourabh-Sharma.png","url2x":"https:\/\/trending.niftytrader.in\/wp-content\/uploads\/2025\/11\/Sourabh-Sharma.png"},"0":null,"1":"","2":"","3":"","4":"","5":"","6":"","7":""}],"_links":{"self":[{"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/posts\/18785","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/comments?post=18785"}],"version-history":[{"count":1,"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/posts\/18785\/revisions"}],"predecessor-version":[{"id":18787,"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/posts\/18785\/revisions\/18787"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/media\/18786"}],"wp:attachment":[{"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/media?parent=18785"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/categories?post=18785"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/tags?post=18785"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/ppma_author?post=18785"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}AI as a Technology Will Win\u2014But AI Stock Prices May Not<\/h1>\n
During the internet era, the companies that built the infrastructure\u2014telecom giants\u2014weren\u2019t the biggest wealth creators. Instead, internet users and adopters in sectors like financial services, healthcare and retail became the real beneficiaries.<\/p>\n
He said, \u201cThe way to play AI is through the users\u2014those serving consumers\u2014not necessarily the capital providers.\u201d<\/p>\nIndian Context: Why Adopters May Outperform AI Creators<\/h2>\n
Chokhani on Indian Markets: Valuations Stretched, Growth Not Keeping Pace<\/h2>\n
\u201cEveryone is chasing growth\u2014even if it means paying 100x forward earnings for a QSR company while ignoring a PSU bank trading at 5x P\/E.\u201d
He believes this skew reflects persistent biases rather than rational allocation.<\/p>\nGlobal Markets Enter a Regime Change as AI Dominates Narrative<\/h2>\n
Where Opportunities Still Remain: Value Pockets and Asymmetric Bets<\/h2>\n
\u201cIf a stock could be 5x P\/E by 2030 and is priced right today, the odds favour strong long-term returns.\u201d<\/p>\n\n