With Nvidia up over 154% year to date, Stifel managing director and chief equity strategist Barry Bannister joins Morning Brief to give insight into Nvidia’s (NVDA) recent moves and how the tech giant reminds him of Cisco’s (CSCO) performance during the dot-com bubble.
“What happened with Cisco (CSCO) is, and same thing happened to Microsoft (MSFT), and Amgen (AMGN) and a number of other big cap shares, is their PE multiple was too high and they earned into it over the course of the next 15 years. So the earnings went up dramatically, as was expected. This happened with the nifty 50 shares in the early 70s. They earned very well, but their PE multiples were too high … those companies had these mid-30s, 40-time multiples. They earned into it over the course of a decade,” Bannister explains.
He outlines the similarities between the dot-com bubble and the AI sector today: “But what we have today is extreme optimism on new technology. Then it was the internet, now it’s AI. Narrow markets, increasingly narrow markets with a high valuation. Equity ownership was very high. And the day traders and all that. I’m just saying that you have to have been there 25 years ago to remember that it was a very similar feeling environment today.”
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