Nvidia’s (NASDAQ: NVDA) meteoric rise, driven by the artificial intelligence (AI) boom, has sparked concerns that the stock might crash, similar to what happened to Cisco (NASDAQ: CSCO) during the 2000 Dot-Com bubble.
However, the long-standing comparison between Nvidia and Cisco’s collapse appears to be over, according to Bloomberg’s analysis.
Notably, Nvidia’s current stock trajectory has far outpaced the path taken by Cisco during the late 1990s technology boom. Cisco, a poster child of the Dot-Com era, saw its stock soar to new heights before crashing when the bubble burst.
To this end, analysts and investors have long speculated for months whether Nvidia was destined for a similar fate.
However, Nvidia’s price has not only exceeded Cisco’s peak by a wide margin but has also held higher levels despite recent market volatility.
As of July 15, the American semiconductor giant traded at $170, while Cisco’s comparable peak during the bubble topped out far lower and subsequently collapsed, never fully recovering.
Difference between Nvidia and Cisco rally
This divergence highlights key differences where Cisco’s 1990s rally was fueled by unsustainable hype surrounding internet infrastructure. In contrast, Nvidia’s rise is driven by growing demand for its chips, which power the global AI revolution.
Indeed, Nvidia is now trading at new highs, breaching the $170 mark for the first time and becoming the first company in the world to command a market capitalization of over $4 trillion.
Nvidia’s latest rally follows news it will resume H20 GPU sales in China, pending U.S. approval, and has launched an export-compliant RTX Pro GPU for China’s industrial market. Analysts view China as having the potential to attract almost $30 billion in revenue for Nvidia.
However, caution is warranted as NVDA shares have entered overbought territory. A Finbold report noted that the last time the stock hit this zone, it was followed by a 35% correction.
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