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Cisco ex-CEO says Nvidia's dominance is different from dot-com bubble - WSJ

Published 06/20/2024, 07:52 AM
Updated 06/20/2024, 07:54 AM
© Reuters Cisco ex-CEO says Nvidia\'s dominance is different from dot-com bubble - WSJ

Nvidia (NASDAQ:NVDA) became the world’s most valuable listed company on Tuesday due to the soaring demand for its AI chips, spearheading a tech surge reminiscent of the dot-com bubble in the early 2000s.

Nvidia’s chips have been crucial in developing sophisticated AI systems capable of generating text, images, and audio with minimal input. This achievement marks the first time since March 2000, when Cisco (NASDAQ:CSCO) held the top spot during the dot-com boom, that a major computing infrastructure provider became the most valuable U.S. company.

Cisco rode the internet revolution, with its products powering the burgeoning industry. Like Nvidia, Cisco also surpassed Microsoft (NASDAQ:MSFT) in value.

John Chambers, Cisco’s CEO during the dot-com boom, acknowledged some parallels but noted the AI revolution's distinct dynamics compared to the internet and cloud computing.

“The implications in terms of the size of the market opportunity is that of the internet and cloud computing combined,” he commented to the Wall Street Journal. “The speed of change is different, the size of the market is different, the stage when the most valuable company was reached is different.”

Nvidia, a 31-year-old company, reached a market valuation of $3.335 trillion, just surpassing Microsoft at $3.317 trillion, with its stock closing at $135.58.

Chambers pointed out that Nvidia’s CEO, Jensen Huang, is following a different strategy than Cisco but faces similar challenges. Nvidia holds a dominant market share, akin to Cisco’s position during the internet boom, and is also dealing with rising competition.

Like Cisco, Nvidia benefited from pre-profitability investments.

“We were absolutely in the right spot at the right time, and we knew it, and we went for it,” Chambers said.

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