What Can Previous Bubbles Tell Us About the State of Today’s Tech Industry?

Tech companies are often seen by investors to be a rather safe bet, but in spite of the fact that this is the case, they are prone to some serious boom and bust cycles with all things having been considered and taken into account. While the tech industry overall has seen profits explode over the years, with share prices increasing several times over, too much focus on the positives can make people forget about the negatives.

The aftermath of the pandemic has led many to start claiming that the dam has burst and that the tech bubble has now collapsed. Amidst plummeting stock prices for most major tech corporations, wary investors have begun to scrutinize the flaws in how tech companies operate than might have been the case otherwise.

With all of that having been said and now out of the way, it is important to note that this is not the first time that the tech company has experienced such a tremendous crash. Taking a look at how previous boom and bust cycles play out can tell us a lot about how things might turn out in the present day.

The origins of the tech industry stretch all the way back to the 1960s, which was when computing started to be seen as something that regular people could take advantage of. Companies such as Hewlett-Packard, Intel as well as IBM became favorites on Wall Street, with their stock prices continuously rising to ever dizzying heights.

Things look set for greatness in the 1960s, but economic turmoil during the 1970s killed a lot of up and comers in Silicon Valley. It seemed like the tech industry was going to turn out to be a blip on the radar, but then the 1980s came and brought the PC revolution along with it.

The next couple of decades saw tech looking absolutely unstoppable with all things having been considered and taken into account. The PC revolution gave way to the rise of the internet, and countless companies started popping up that began to take advantage of the internet in numerous ways.

However, much like what had happened previously, all of this growth ended up being unsustainable. In the year 2000, the tech industry faced one of the biggest crashes in record history, with the Nasdaq falling by a whopping 39%.

Very few companies managed to survive, and tech billionaires saw their fortunes plummeting. Despite all of this, major players such as Google, Microsoft and Amazon managed to not just survive, but actually thrive in the new environment.

The Dot Com Bubble was caused by speculative investing, and when the bets didn’t pay off, people started to pull their money out. The post Dot Com Bubble recovery was marred by the 2008 recession, but the 2010s ended up being one of the best decades for tech of all time.

We are living in an era of economic turmoil, and tens of thousands of tech workers have been laid off as major corporations try to make ends meet. With ethical questions arising from every corner and business practices being questioned, this turmoil will only serve to strengthen the tech sector further although there is no telling how long a recovery might take.

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by Zia Muhammad via Digital Information World