In an interview with Business Insider, the banker and author of a new guide for technology investors, “Tech Money”, emphasizes that the unprecedented dominance of big tech will limit the scale of possible market declines, but this does not mean that the world will survive a possible crisis unscathed. He claims that very hard to find a place to hide if it really goes down.
Pejic points to the greater “durability” of companies such as Alphabet and Microsoft compared to former market leaders such as Exxon Mobil, General Motors and IBM.
Big tech companies have maintained dominance for decades, he says, in part because of platform models that give them “almost unlimited pricing power” and make them “virtually impossible to displace.”
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In other words, they have become strongly established by attracting huge numbers of users, app developers, hardware providers, advertisers and other participants to their ecosystems. Thanks to this they can easily raise fees and it is difficult for new players to gain market share.
Pejic also noted that Apple, Meta and other similar companies have successfully navigated many technological changes, such as the shift from desktop computers to mobile devices and from on-premises IT infrastructure to the cloud.
Big tech companies they also generate huge amounts of cashwhich allows them to simultaneously implement several large projects and finance investments without the need to use expensive external financing. Pejic described it as a “protective moat” against competition, especially in an AI race characterized by “huge infrastructure costs.”
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Echoes of the past
Pejic pointed out several similarities between the AI boom and the dot-com bubble. These include breakthrough technology, partnerships and financing agreements between key players, network infrastructure development and “extreme” valuations.
Still, he believes the AI collapse “will not be as devastating as the burst of the dot-com bubble.”
Any market sell-off will be shorter and less severe because today's tech giants have very profitable core businesses. — which means their stocks won't completely crash even if their AI investments turn out to be bad.
They are also less exposed to liquidity problems or causing a financial crisis because they rely to a limited extent on bank financing. Investors are also more selective than in the dot-com era, when virtually every company with “.com” in its name was bought.
However, Pejic pointed out some risks — including the fact that many companies spend huge amounts of resources to create the best AI model, when the market will likely only be able to sustain a few of them.
He also drew attention to the huge involvement of investors' capital in a small group of technology companies, which results from the popularity of index funds reflecting indices such as the S&P 500, weighted by market capitalization and strongly focused on the so-called Magnificent Seven.
— It's very hard to find a place to hide if it really goes down says Pejic. — If you keep your money in the stock market and AI goes down, it will affect everything – he adds.
He noted that the risk will only increase as AI companies such as OpenAI, xAI and Anthropic go public and are included in indices, increasing the exposure of ordinary investors to AI.
Pejic stated that owning big tech stocks is “perhaps the safest way” to profit from AI, due to their self-sufficiency, vast resources and diversified businesseswhich limit potential losses and protect against industry shocks such as the emergence of DeepSeek.
As an example, he pointed to Apple's strategy of refraining from spending hundreds of billions on microchips and data centers, instead monitoring developments in the AI race and cooperating with other companies or purchasing the necessary competences.
Apple may not be the “most exciting company,” but for investors, owning it is a “smart and relatively safe strategy without burning excessive cash.” – sums up.
The above text is a translation from American edition of Business Insider
