Nvidia, a key player in the AI boom, has seen its stock triple in the past year, replacing Microsoft as the world's most valuable company. However, some experts have compared Nvidia to Cisco, a company whose stock crashed after the dot-com bubble. While it's uncertain whether the AI craze will end in a crash or usher in a new market regime, experts suggest looking to history for potential outcomes.
Key takeaways:
- Experts warn that the current frenzy around AI stocks resembles the last two major market bubbles, the dot-com and 2008 housing bubbles, and could end in disaster if investors get spooked.
- The Federal Reserve's 'relatively loose' monetary policy and the 'unprecedented fiscal stimulus in the wake of the COVID-19 pandemic' are common factors between this market and the last two big bubbles.
- Nvidia, the star stock of the AI boom, has more than tripled in the past year and just replaced Microsoft as the world's most valuable company worth $3.3 trillion.
- Some experts have compared Nvidia to Cisco, the network hardware company whose stock ballooned during the dot-com bubble before ultimately crashing, while others believe the market for AI could equal 'the internet and cloud computing combined'.