I hear speculation regularly about a new Internet bubble.
The reality is that it would be ‘new’ because we haven't had a first Internet bubble yet.
Everyone I know is wrong when talking about the first Internet bubble in 2000 on Nasdaq. Stocks on Nasdaq rose rapidly over the year 1999 and 2000. They fell no more rapidly in 2000 and 2001. In a bubble the fall is abrupt as in 1929 and 2008, where 40% of asset value disappears in three months.
What happened in 2000 was that investors were investing in a business model that had reached a peak. What was called an Internet business was in fact an HTML business. Over one million companies needed a web page, just as they had previously needed a Yellow Pages listing.
Small companies were formed to create these web pages. The web pages were nearly all static, like a business card. When every relevant business had a web page, the business was over.
Starting in 2002 companies began to see the need for interactive websites where products and services could be bought. A very different business that required new data bases, more complex programming and IT staffing for maintenance.
There are two kinds of businesses on the web today. Those that are supported by advertising such are Google, Facebook and Yahoo. The global world of advertising is finite and when that world is reaching its limits the advertising supported businesses will peak and level out.
My rough guess is that the advertising supported web businesses are valued at $1.5 trillion dollars on an advertising base of $100 million. We are reaching the end of growth in that domain.
The rest of the web is based on actual sales revenue for products or services. That would be Amazon, Netflix, Salesforce and Uber. That also includes programming firms like Oracle. My guess is that market is over $5 trillion in market capitalization. That is growing and will grow as the global economy grows and it will grow as a percent of the global economy.
The web is an integral part of the telecom world these days. That doesn’t seem to be directly tied to web revenues.
I see no Internet bubble.