“History doesn’t repeat itself, but it often rhymes.”
– Mark Twain

As a long-time Buffalo Bills fan, I can attest to that.

A few weeks ago, I was talking with a financial advisor friend about the parts of the dot-com era that may rhyme with today's AI boom. One obvious similarity is that both represent transformational technologies that change how we live and work.

Consider Google. Sergey Brin and Larry Page founded the company on September 4, 1998, five years after the launch of the World Wide Web in 1993. Google did not go public until August 2004, raising $1.67 billion. For perspective, SpaceX raised $85.7 billion in June of this year alone. Similar, but different.

Capital expenditures related to AI are soaring, much like they did during the dot-com era. Dot-com spending produced some incredible businesses and some epic failures. Companies were often measured by non-financial metrics such as “eyeballs,” a reference to website traffic. One of my favorite measures was “mindshare,” which attempted to quantify how much space a company occupied in the minds of consumers.

One metric that proved particularly useful was “burn rate,” or how quickly a company was spending its cash. When the dot-com bubble burst in March 2000, many companies suddenly found themselves facing a brutal reality: access to capital disappeared almost overnight. Burn rate quickly became more than a talking point. It became a matter of survival.

That brings us to cash flow.

In 1988, FASB Statement No. 95 established the requirement for publicly traded companies to report a statement of cash flows. The standard shifted the focus toward cash generation and usage across three categories: operating, investing, and financing activities.

Our discussion led to a simple conclusion regarding U.S. stocks, not just AI-related companies: cash flow matters.

David Tang once said, “The three most dreaded words in the English language are ‘negative cash flow.’”

While the companies and technologies may change, the fundamentals do not. Positive cash flow remains at the heart of every successful business.

Just as we knew the internet would change the way we live and work, we know AI will do the same. In many ways, it already has.

What has not changed is how companies survive:

“Straight cash, homie.”

– Randy Moss

Strategas Asset Management, LLC and Baird LLC are affiliated with Robert W. Baird & Co. Incorporated ("Baird"), a broker-dealer and FINRA member firm, and an SEC Registered Investment Adviser, although the firms conduct separate and distinct businesses.