alt Hacker NewsWell... AOL had rather extreme aspirations and a massively overvalued market cap during the internet boom as well.
So yes, ridiculous things like that happen and markets are very often not rational at all (short and medium term at least).
Nortel, Sun, AOL, Cisco were all very innovative and rapidly growing companies. Until reality kicked in.
While you’re not wrong at all in the concept of your post, I wouldn’t call AOL a particularly innovative company. They basically innovated once and then went straight into lazy rent-seeking for the rest of their existence.
I don’t know if I would put Cisco or Nortel in that category, either. They were like gold rush pickaxe companies. The pickaxes themselves weren’t particularly innovative in their case.
A lot of the innovative companies from the dot com era are still around.