The same technology stocks that investors fear could be fueling a market bubble may also help them weather a correction. Nancy Tengler, CEO and chief investment officer of Laffer Tengler Investments, argues that today's AI boom differs from the dot-com era, and that profitable mega-cap tech companies offer more than speculative growth: They generate earnings and return cash to shareholders.

Her argument arrives as investors reassess the cost of the AI buildout. On Thursday, Oct. 22, U.S. stocks sold off sharply as concerns about AI spending and rising oil prices rattled markets. Tengler's view offers a counterpoint to the instinct to abandon technology whenever volatility returns.

Why This Isn't Another 1999

Tengler said the late-1990s internet bubble was defined by euphoria, whereas today's market is grappling with persistent skepticism about whether AI investments will pay off.

"There was no concern during the internet bubble in late 1990s," she said in emailed comments. "It was all euphoria."

That distinction matters, but it does not mean AI stocks are immune to excessive valuations. Investors are now scrutinizing the enormous sums going into data centers, chips and computing infrastructure, while asking when those investments will translate into sustainable profits.

Tengler's broader case is that today's leading technology companies have established businesses and earnings streams behind their AI ambitions.

In a recent market discussion, she highlighted earnings growth, dividends, share repurchases and financial strength as reasons she considers select mega-cap technology stocks potentially defensive holdings.

Big Tech's Defensive Side

Tengler argues that investors can remain exposed to the AI revolution without relying entirely on share-price appreciation. She pointed to Nvidia Corp (NVDA), Apple Inc. (AAPL) and Microsoft Corp. (MSFT) as companies that pay dividends and buy back shares, giving investors additional ways to receive capital while waiting for growth to compound.

"The best offense is good defense," she said, explaining why she wants technology exposure even if growth slows or the market corrects.

The distinction is important: Dividends and buybacks do not prevent a stock from falling, and neither guarantees that a company will generate attractive returns from its AI investments. But established earnings and cash returns can give investors a different reason to own a company than the promise of future growth alone.

The Risk Investors Still Face

Tengler's argument ultimately depends on whether AI leaders can continue growing earnings while funding their ambitious investment plans. If spending rises faster than returns, or growth disappoints, even profitable companies can face valuation pressure.

For investors, the takeaway is not that Big Tech is a crash-proof trade. It is that a correction could separate companies with durable earnings and shareholder returns from those whose valuations depend more heavily on distant AI promises.

Watching cash generation, capital spending and evidence of AI monetization may matter more than deciding whether the entire AI boom deserves the "bubble" label.