Nvidia's Rise Resembles Dot-Com Boom Era, But Former CISCO CEO Says Things Are 'Different' This Time

Nvidia Corp. NVDA has emerged as the world’s most valuable listed company, driven by the demand for its artificial intelligence chips, reminiscent of the dot-com boom.

What Happened: Nvidia has ascended to the top spot, leading a tech boom that mirrors the dot-com era, Wall Street Journal reported on Tuesday.

John Chambers, who was the CEO of Cisco Systems Inc. CSCO when it took the top spot at the height of the dot-com boom, noted parallels between the two periods. However, he emphasized that the dynamics of the AI revolution are distinct from previous tech booms such as the internet and cloud computing.

Chambers, now a venture investor, stated, “The implications in terms of the size of the market opportunity is that of the internet and cloud computing combined.”

"The speed of change is different, the size of the market is different, the stage when the most valuable company was reached is different."

See Also: Elon Musk Echoes Nvidia CEO Jensen Huang’s Prediction About Humanoid Robots: ‘They Will Be 10X More Common Than Cars’

Despite the surge in AI investments, some investors remain skeptical about the sustainability of this boom. Sequoia Capital estimates that Nvidia’s chips have attracted $50 billion in investments since the boom started, while generative AI startups have only generated $3 billion in sales.

Neil Shearing, Chief Economist at Capital Economics, warned that the “enthusiasm around AI has all the hallmarks of an inflating bubble” and predicted a period of significant underperformance for the U.S. market following the burst of this bubble.

Why It Matters: The AI-driven tech boom, as seen in the rise of Nvidia and Apple Inc., has been compared to the dot-com era. However, experts like John Chambers argue that the dynamics of the AI revolution are different, potentially leading to a larger market opportunity.

Despite the optimism, some market experts have raised concerns about the sustainability of this boom. Warnings of potential market pullbacks and the possibility of Nvidia being in ‘bubble-ish territory’ have been flagged.

Price Action: According to Benzinga Pro, Nvidia’s stock was trading 3.54% higher on Thursday’s pre-market trading at $140.39 after it closed at $135.58 on Tuesday.

Read Next: Michael Dell Says Generative AI Tech Wave Sweeping In Much Faster Than Early Internet: ‘It’s Happening Maybe 10 Times Faster’

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This story was generated using Benzinga Neuro and edited by Pooja Rajkumari