CSCO - Why Nvidia Could Become The Largest Company But Not For Long
2024-04-03 09:30:29 ET
Summary
- Just like Cisco Systems 24 years ago, Nvidia Corporation seems on its way to overtake Microsoft Corporation as the largest company on the planet.
- However, that might not take for long, with as much as -90% downside afterward. Investors need to be aware of this risk.
- In this article, I discuss why the high P/E ratio of Nvidia is not that big of a problem and unveil my biggest concern for investors.
- I lay out my exact expectations for the coming years, including a potential blow-off top, followed by a crash once reality kicks in. I discuss how to benefit from it.
- The goal of this article is not to spread fear. Instead, I want to provide a sense of realism during the craze going on with AI and Nvidia stock.
The game that Mr. Market continuously plays with investors is fascinating.
Exactly 24 years ago, on March 27, 2000, Cisco Systems, Inc. ( CSCO ) surpassed Microsoft Corporation's ( MSFT ) $540 bln market cap and became the most valuable company on the planet.
This news sucked the last retail investors in the dot-com rally.
Cisco maintained this number one position for exactly one day, and March 27, 2000, entered the history books as the peak of the dot-com bubble.
Afterwards, Cisco crashed by -90% from March 2000 to October 2002.
History never repeats itself, but it often times rhymes.
Today, I am seeing a very similar scenario playing out with Nvidia Corporation ( NVDA ), the leading AI infrastructure provider.
Nvidia ($2,300 bln market cap) looks on its way to surpass Microsoft ($3,100 bln market cap) as the most valuable company later this year....
Why Nvidia Could Become The Largest Company, But Not For Long