NYU finance professor Damodaran warns an AI crash could hit harder than the dot-com bust
An AI crash could dwarf the dot-com bust. Here's why a NYU finance professor thinks the wreckage will be worse.
Why it matters
As AI capex spending reaches historic levels, a leading finance academic warns that massive debt-financed infrastructure creates systemic risk far exceeding the 2000 bubble—and even success poses societal challenges around job displacement.
The key facts
4 to knowAswath Damodaran (NYU finance professor) predicts AI crash would be worse than dot-com bubble
Key risk factor: debt-financed physical infrastructure (not lightweight software like dot-com era)
Even successful AI creates problem: business model centers on job replacement with unclear societal consequences
Published June 2026 — reflects current capex and infrastructure cycle concerns
Go to the source
The Decoderthe-decoder.com
Publisher excerpt: NYU finance professor Aswath Damodaran believes a potential AI crash would be more painful than the bursting of the dot-com bubble because the industry is building massive amounts of debt-financed physical infrastructure rather than lightweight software. Even if AI succeeds, he sees a problem. The…