The AI Boom Isn't 1999—and Big Tech Could Cushion a Market Crash, This CEO Says
Key takeaways
- Profitable big‑cap tech stocks with dividends and buybacks may act as defensive bets in a potential market correction, but their resilience depends on sustaining earnings while funding AI investments.
- AI spending is under scrutiny
- NVDA, AAPL, MSFT pay dividends and buy back shares
- Oct. 22 U.S. stocks fell sharply
What happened
U.S. stocks fell sharply on Oct. 22 after worries about AI spending and higher oil prices rattled markets. CEO Nancy Tengler of Laffer Tengler Investments said the current AI boom is different from the late‑1990s internet bubble and that big‑cap tech firms like Nvidia, Apple and Microsoft have solid earnings, dividends and share‑repurchase programs that could help them weather a downturn.
Why it matters
Investors are re‑examining how much money is being poured into AI infrastructure and whether those costs will translate into profits. Tengler argues that profitable mega‑cap tech companies provide more than speculative growth, offering cash returns that could make them defensive during a market correction.
Short-term and longer-term
Short-term. Over the next few days, watch for any earnings releases or guidance from NVDA, AAPL and MSFT that detail AI‑related capital spending and cash flow.
Longer-term. Over the coming months, investors should assess whether these mega‑caps can maintain earnings growth while funding AI initiatives.