Get ready to meet the 'love child' of the dot-com crash and financial crisis, tech guru Erik Gordon says

The end of the AI boom won't be pretty, business professor Erik Gordon says.

Osmancan Gurdogan/Anadolu via Getty Images An AI slump will combine features of the dot-com crash and Great Financial Crisis, Erik Gordon says.

The business professor said the AI boom couples extreme valuations with enormous contagion risk.

Potential "losers" include banks, insurers, and investors in index funds and ETFs, Gordon said.

The AI boom marries dangerous elements of internet mania and the mid-2000s credit bubble, raising the specter of a financial catastrophe, Erik Gordon says.

"The next crash will look like the love child of the dot-com crash and the Great Financial Crisis," the entrepreneurship professor told Business Insider by email.

Gordon, who teaches at the University of Michigan's Ross School of Business, said the AI boom "inherited the hype and overvaluations of the dot-com bubble." While the nascent technology is likely to create more value than the internet, he said, company valuations are so extreme that "most investors will get killed, just like most of the dot-com investors." Gordon, who researches topics such as technology commercialization and AI, said the "losers" from an AI crash will extend beyond direct investors to buyers of index funds and exchange-traded funds, given that tech giants make up such a large part of the market.

The five largest US companies by market cap — Nvidia, Apple, Alphabet, Microsoft, and Amazon — are together valued at over $20 trillion, in no small part because investors expect them to be huge winners from the AI trend .

Borrowing binge Gordon also raised the alarm on the scale of AI companies' debts.

They've "racked up a few trillion dollars of debt obligations on and off their balance sheets , and they're not done borrowing," he said.

If they're unable to repay even a portion of their commitments, the "financial damage" will spread beyond stockholders to "burn banks, investment funds, and even insurance companies that made loans," he continued.

"The contagion across financial markets will remind us of the GFC," he added.

The dot-com crash wiped out thousands of startups, and even future world-beaters such as Amazon saw stock-price declines of over 90%.

The collapse of the mid-2000s housing bubble and the ensuing financial crisis saw Lehman Brothers go bankrupt, AIG and Bear Stearns bailed out, and the global economy plunge into recession.