Guest Post: Is Toilet Paper A Better Investment Than AI Stocks?

Core Insights - The article discusses the comparison between AI stocks and traditional investments, particularly using the example of toilet paper stocks versus internet equipment companies from the late '90s [1][12]. Investment Experience - The author reflects on their early investment experiences during the tech bubble of the late '90s, noting that many high-tech companies saw their stock prices soar before crashing [3][5]. - The author questions whether current AI stocks are a good investment, comparing the current market to the tech bubble [3]. Historical Context - The Nasdaq and S&P saw significant gains of 70% and 60% respectively from 1995 to 1996, leading to a rush in tech investments [4]. - Many companies from the internet equipment sector have either disappeared or merged, with Nokia being one of the few survivors [8][9]. Company Valuations - The combined peak valuation of Alcatel, Lucent, and Nokia during the dot-com bubble was $550 billion, which would be over $1 trillion today when adjusted for inflation [10]. - As of 2025, Nokia's market capitalization is only $32 billion, representing a significant loss for early investors [10]. Comparative Analysis - A comparison of Nokia and Kimberly-Clark shows that while Nokia had a total return of 87% over 30 years, Kimberly-Clark had a total return of 363% [13]. - The average annual return for Nokia was 2.1%, while Kimberly-Clark's was 8.0%, highlighting the stark difference in investment performance [13]. Future Outlook - The article raises the question of whether investments in AI will outperform traditional stocks like toilet paper over the next 25 years [14]. - The author suggests that while AI valuations may experience a pullback, the long-term outlook remains positive for the sector [19].