Nvidia's stock price is still refreshing record highs, and the atmosphere of "Cisco skyrocketing" in the Internet bubble era seems to be back.
On January 29, Nvidia closed up nearly 24%, once again refreshing the ** all-time high set last Thursday, and the year-to-date gain has reached nearly 30%.
According to data from Yardeni Research, Nvidia's stock price has risen more than 250% as of January 19 since OpenAI launched ChatGPT on November 30, 2022. Driven by NVIDIA's surge, the S&P 500 semiconductor index also rose by 108%. 
Whether the fanatical pursuit of AI has spawned a new bubble" has become an unavoidable topic for U.S. stocks. As Leon Cooperman, an American billionaire and former hedging manager, said, it's hard not to think of the excitement of the market during the dot-com bubble when you see Nvidia:
In 2000, everyone on the Internet was shouting - Cisco, Cisco, Cisco. Cisco was $80 at the time. When tech stocks**, the market crashed and its share price fell 90% to $6. Today, 23 years later, Cisco's stock price still hasn't reached the level it was in 2000.It has been argued that investors in Nvidia and AMD are happy now, and unfortunately, investors in Cisco and Intel in 2000 are also happy.
Cisco is the poster child for the dot-com bubble, and despite its extremely high valuation at the time, investors are bullish on its future prospects and bet that Cisco is expected to dominate the internet hardware market. In 2000, Cisco reached its historic peak. At that time, Cisco's market share of network switches was as high as 69%, and the market share of network routers exceeded 85%.
At that time, Microsoft's Windows, Intel's processors, and Cisco's network equipment were known to the worldWintelco systemIt represents the three major standards of computer software, hardware and network.
On March 27, 2000, Cisco's total market capitalization reached a record $555 billionBecame the most valuable company in the United States at the time
In 2001, the bubble of the global Internet economy burst, and Cisco's "myth" was not thereIts market capitalization once shifted frombillion dollars fell tobillion dollars (down two-thirds).
And now NVIDIA's AI chips have also become a "must-have" infrastructure for tech giants. Ed Yardeni, founder of Yardeni Research, pointed out that the tech giants' frenzied demand for GPUs is being reflected in Nvidia's stock price, and the question now is whether Nvidia will face similar problems as CiscoOnce companies have enough servers and computing power to run AI applications, will the demand for "AI infrastructure" also fall off a cliff**?
Perhaps Nvidia's current glory is not accurate to compare to the dot-com bubble era, but on the other hand, perhaps no one knows what the real demand for GPUs will be in the coming years.Investors widely expect the Federal Reserve to cut interest rates this spring, given that inflation is falling faster than expected.
Ed Yardeni believes that the arrival of the Fed's interest rate cut cycle may boost the "irrational exuberance" of the US market, and if the Fed "celebrates" the victory against inflation in advance, it may exacerbate the risk of risk assets sharply spawning a bubble, and once the bubble bursts, a recession will follow
Former Federal Reserve Chairman Alan Greenspan coined the concept of "irrational exuberance" to describe a situation in which investors have been hyped to an abnormal and unsustainable height.It is worth noting that it was previously reported that a large amount of money poured into the currency market due to high yields, and in early December, the size of the US money market reached a record 59 trillion dollars. While waiting for the outcome of the Fed's fight against inflation, many investors have chosen to lock in profits with safer financial instruments.If Powell celebrates ahead of time for successfully bringing inflation down without triggering a recession, they could exacerbate the risk of asset inflation.
And when the Fed starts cutting interest rates, it could change all that, and as the federal rate cuts, so will the yield on money, and these funds could flow into bonds and bonds in large quantities, increasing market volatility and potential crash risks, the analysis noted
In the current environment, there is a possibility that this decade will be a tech 20s tech binge rather than a repeat of the '70s inflation or the 20s productivity-led boom. However, this also means that a new bubble may be brewing in the market.Analysts believe that the last big mistake for the Fed was that it "ignored" the lag of the inflation curve in 2021-early 2022, and the next big mistake could be to blow up the "** bubble". Powell, knowing this, may reiterate his stance that he is not in a hurry to lower interest rates.
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