E7: NVIDIA AI BUBBLE - We Can't Stay Quiet Any Longer

Summary

Larry, an experienced investor, analyzes whether we are currently in an AI bubble by comparing today's market to the dot-com bubble of 2000. He examines key metrics like the NASDAQ's price increase, high PE ratios, extremely overvalued IPOs, and parabolic stock moves. Concluding that by these measures, we are far from bubble territory, Larry then debunks the notion that Nvidia is akin to Cisco in 2000. He highlights Nvidia's exponentially greater earnings growth versus mere promised potential future profits for Cisco. With insightful analysis grounded in historical data, Larry makes a compelling case that we are not in an AI bubble.

Takeaways

• 😀 Larry lived through the dot-com bubble professionally and has studied what happened
• 👓 Key metrics show we are not in a tech bubble like 2000: lower NASDAQ returns, valuations, fewer parabolic stocks
• 📈 IPO frenzy in 1999/2000 much more extreme than today: average 70% day 1 pops, 165 IPOs doubled day 1
• 💰 Nvidia's profits and growth dwarf Cisco's in 2000 bubble; quality of Nvidia's customers also higher
• 🤑 Top 10 NASDAQ companies today have 12x more revenue than in 2000, but index price only 3.7x higher
• 🏦 Profitability of top companies today is real, not just promises like in 2000
• 👮‍♂️ Governments and top companies globally racing to build AI infrastructure and platforms
• 🧠 Generative AI seen as next phase of computing evolution - huge opportunities ahead
• 🔬 Nvidia leads in parallel computing hardware for AI with huge technology lead
• 😊 Conclusion: By metrics and experience, we are not in an AI bubble like 2000 dot-com bubble

Q & A

What were some key differences between the dot-com bubble and the current market environment?

Some key differences are: 1) The NASDAQ 100 went up 12x in 5 years during the dot-com bubble, but has only gone up 3x recently. 2) The PE ratio peaked at 175 during the dot-com bubble versus 42 now. 3) There were 20 stocks that went up over 900% in 1999, whereas now there is mainly just Super Micro up significantly. 4) Over 165 IPOs doubled on their first day in 1999-2000, whereas no recent IPOs have. 5) Companies today like Nvidia are actually highly profitable unlike many dot-com companies.

What evidence does Larry provide that we are not in an AI bubble specifically?

Larry points out that Nvidia, which people claim is emblematic of an AI bubble, is actually growing earnings much faster than its stock price. Additionally, AI-focused companies do not dominate the list of recent top performing stocks.

How did Cisco and Nvidia compare regarding profitability?

Nvidia made $29.7 billion in net income over the past year, which is 11x more than Cisco's best year ever. Also, Nvidia made more profit in the past quarter than Cisco did in its best year fiscal 2000.

What role did low quality customers play in the downfall of companies like Cisco?

Many of Cisco's customers during the dot-com bubble were speculative internet companies with little revenue or viability themselves. So when those customers went bankrupt, it severely hurt Cisco's business. This is different from Nvidia today whose big customers are extremely profitable giants.

What signals would suggest we are entering bubble territory?

Key signals would be seeing a rapid increase in IPOs for AI-related companies without strong fundamentals, seeing more stocks going parabolic with gains of 10-20x over short timeframes, and seeing index-level valuation multiples enter extreme territory again at 100+ PE ratios.

Why is it difficult for other companies to compete with Nvidia's leadership in AI hardware?

Nvidia has a multi-year technological lead, tremendous specialized engineering talent, and an ecosystem built around their CUDA platform. Competitors can't simply catch up to them overnight, so Nvidia's dominance should persist for some time.

Could today's market decline significantly without it being a bubble bursting?

Yes, absolutely. Markets can experience large corrections without it being the end of a speculative bubble. Key indicators to monitor would be extreme PE ratios collapsing along with fundraising mania ending versus a simpler revaluation lower based on higher interest rates and economic concerns.

What made Qualcomm's stock price rise over 4000% in the dot-com bubble?

At the time, Qualcomm was seen as a central play on the adoption of cell phones and mobile internet. However, sky-high expectations for profits were not met, and it became clear that cell phone adoption would not match the hype and speculation that drove such a dramatic price increase for Qualcomm stock.

Did stock prices often swing wildly intraday during the dot-com bubble?

Yes, Larry mentions stocks would frequently rise or drop 100 points or more in a single day. This was indicative of the extreme speculation and volatility during that period, very different than the current environment.

What lessons did Larry learn about investing from living through the dot-com bubble?

He learned the importance of technical analysis and sticking to stop losses. Larry follows a 100% technical process now, using moving averages to determine entry and exit points. This protects him from emotive decision making and big drawdowns.

Outlines

00:00

😊 Alex and Larry discuss whether we're in an AI bubble

Alex welcomes Larry to discuss whether we're in an AI bubble. Larry shares his experience actively trading during the 1999 dot-com bubble. He decided to study what happened to prevent losing money again. He thinks we're not in a bubble now based on data and will compare today to March 2000.

05:00

😲 1995-2000: NASDAQ 100 went up 12x versus 3x recently

The NASDAQ 100 went up 12x from 1995-2000 over 5 years. Recently over the past 5 years, it has only gone up 3x. So it has moved up 1/4 as much as during the dot-com bubble.

10:06

😮 20 stocks went up 900%+ in 1999, only 1 today

In 1999, 20 tech and internet stocks went up 900% or more, with the top performers going up over 4000% in 18 months. Today, only 1 speculative biotech stock is up 900%+ in the past year. Current top performers are much smaller moves.

15:07

😥 Larry lost a lot personally in the 2000 crash

Larry shared how he made and lost a lot of money in the 1999-2000 runup. He didn't understand the risks and bought all the way down. He took time to study what went wrong and developed a technical trading process to protect his investments.

20:10

🤔 Super Micro is the only "bubble stock" now

Of the current market leaders, only Super Micro has gone up significantly at 17x. The other top performers are biotechs and tech stocks, much smaller than the household tech names that skyrocketed in 1999.

25:13

🙅‍♂️ 1999 IPOs had massive first day pops

IPO stats show that average first day returns in 1999 were over 70% versus 16% historically. Hundreds doubled on the first day. Today's IPO moves seem small by comparison with likely no 100%+ pops in 2023.

30:16

🤑 $27B market cap on no sales

One 1999 company raised $1B with no sales and still achieved a $27B market cap, purely on speculation. This is far more extreme speculation than any recent IPOs.

35:17

😱 Cisco vs. Nvidia show how different 2000 is from now

Comparing Cisco in 2000 to Nvidia today shows Nvidia made 11x more income last year. Nvidia made more in 20 days than Cisco did in entire 2000. If Nvidia had Cisco's 1999 valuation, it would be a $5.8 trillion company.

40:18

📈 Current top 10 have 12x the revenue

The top 10 NASDAQ companies today have 12x more revenue than the top 10 in 2000, but NASDAQ 100 price is only up 3.7x. So fundamentals are stronger now.

45:18

🤝 Higher quality customers now

The top companies then had poor quality dot-com customers, so crashed when those customers failed. Top companies today like Nvidia sell to extremely financially stable buyers like Microsoft and Apple.

50:19

🧐 Larry did the legwork analysing financials

Larry stresses that his team did the legwork pulling actual historical financials. He wants to remain objective, so welcomes any contrary bubble data, but hasn't found any comparable to 2000.

55:22

✅ Summary - not in a valuation or technology bubble

Quick summary of all points why this is not yet showing signs of a devastating bubble across index valuation, parabolic moves, IPO speculation and profitability & stability.

Keywords

💡Tech bubble

A tech or dot-com bubble refers to a period of speculative investment and high valuations in technology and internet companies, often not justified by actual fundamentals. The video compares the suspected current AI bubble to the infamous dot-com bubble of 1999-2000, analyzing metrics like price movements, valuations, speculative stocks, IPO frenzies and profitability.

💡NASDAQ 100

The NASDAQ 100 stock market index consists of the 100 largest non-financial companies listed on the NASDAQ stock exchange. The video looks at the 12x price increase of the NASDAQ 100 from 1995-2000 versus only a 3x increase from 2018-present, arguing the latter does not indicate a bubble.

💡Valuations

Specifically price-to-earnings (PE) ratios, which measure a stock's current share price relative to its earnings per share. At bubble peak in 2000, the NASDAQ PE was 175 versus only 42 today, again suggesting no bubble.

💡Parabolic stocks

Stocks that skyrocketed nearly vertically in the dot-com bubble, like Qualcomm up 42x and MicroStrategy up 45x in months. Today's top performers like Super Micro are tame by comparison, further evidence against a bubble.

💡IPO frenzy

In 1999 over 440 IPOs entered the market and doubled on their first day of trading, on average. Today IPO activity is far more moderate in both volume and first day pops.

💡Nvidia vs Cisco

Many compare Nvidia today to Cisco in 2000 but the analysis shows Cisco had lower revenues and profits at its peak versus Nvidia today, while also serving riskier startup customers.

💡Profitability

Unlike unprofitable dot-com IPOs in 2000, top companies like Microsoft, Apple and Nvidia today are seeing earnings grow much faster than stock prices rise, indicating sustainable valuations.

💡Speculative stocks

Riskier, mostly biotech stocks dominate today's top price performers versus the widespread mania around internet stocks in 2000, showing investors are still relatively disciplined.

💡Price movements

While prices today are not at dot-com bubble extremes, the analysis admits stocks can still undergo corrections without qualifying as a popped bubble.

💡Stock market bubble

The conclusion is today's stock market shows nowhere near the euphoria and hysteria present in 2000 based on metrics like less extreme price rises, lower valuations, fewer speculative stocks, lower IPO activity and higher quality earnings growth.

Highlights

During the dot-com bubble, the NASDAQ 100 went up 12x over 5 years. Today it has only gone up about 3x.

The peak NASDAQ valuation in 2000 was a PE ratio of 175. Today it is only 42, one quarter of the dot-com bubble valuation.

In 1999, 20 tech stocks went up over 900% in one year. Today only 1 or 2 stocks have done that.

In 1999, the average internet IPO first day return was over 70%. Today we haven't seen any IPOs double on the first day.

Nvidia recently made more profit in 20 days than Cisco did at the peak of the bubble in 2000.

If Nvidia had the same 1999 Cisco PE ratio today, it would be a $5.8 trillion company.

The quality of companies and customers today like Apple, Meta, Microsoft etc is much higher than in 2000.

The top 10 NASDAQ companies today have over 12x the revenue of the top 10 in 2000, but the index price is only up 3.7x.

Back in 2000, Cisco and others were selling to startup dot-coms with little revenue or viability. Today top companies are selling to extremely financially stable customers.

Apple and countries realize AI is the next phase of the internet. There's only one company providing the GPU hardware infrastructure for it - Nvidia.

No company will compete with Nvidia in AI hardware overnight. By the time they catch up, Nvidia will be even farther ahead.

Prices can fluctuate but based on historical bubble data, today's market shows no signs of being in a bubble.

Actual bubble research requires comparing hard valuations, fundamentals and metrics then versus now.

It's not just about Nvidia versus Cisco, but index and sector valuations, speculative activity, profitability and more.

We must analyze the essence of historical bubbles and compare it rigorously to today before crying bubble.

Transcripts

so no matter where we turn everybody

seems to think that we are in aom style

Tech bubble I think that this is a

bubble and I don't use that term lightly

we're now you know deeply into into

bubble territory we are living through

just a massive AI bubble So eventually

that suggests that there's going to be a

reckoning so what I decided to do for

this special episode of funding awesome

is bring in my good friend Larry

tentarelli and talk about whether we are

or are not really in an AI bubble the

stock market your time is valuable so

let's dive right into it Larry I think

the first question everyone is going to

have is what the heck qualifies you to

tell us if we're in a bubble right now

sure Hello Alex thank you for having me

on I started in the market in

1998 so I'm going on year number 26 now

I was a series 7 licens broker with

maril Lynch

1998 to 2003 so I actively traded right

through through the run up and then the

run down in the NASDAQ 100 back then so

I lived through the do bubble on a

professional basis and on a daily basis

I made a lot of money I lost a lot of

money but what I decided to do after the

NASDAQ melted down in

2201 I decided to really study what

happened and commit myself to be sure

that that didn't happen to me again

about last May is when I really started

to see the the bubble talk start to show

up on Twitter there was already talk it

was an AI bubble it was a tech bubble

I'd say about 90% of the posts that I

saw were very bearish I've got a

subscription-based website it's a

research website called bluechip

daily.com our subscribers include hedge

fund managers portfolio managers

research analysts Financial uh

journalist and Retail investors some of

our commentary has been featured on CNBC

Barons Bloomberg Reuters and a few other

sources I've been posting for 11 years

since January 2013 and and we've been

fortunate I've developed a follower base

of over 90,000 people and I said to

people I don't think that this is a

bubble whatsoever and I think that this

is going to continue a lot longer than

most people think and now here we are 10

months later and I think the same thing

I don't see a bubble whatsoever based on

my prior experience living through the

dotc bubble we did the research and

compiled the hard data and we're going

to compare all of the numbers from that

bubble in March 2000 versus all of the

numbers today and I think that when your

viewers get done with this video they'll

probably come to the same same

conclusion that there there's nothing

today that looks anything like the

bubble in 2000 so we have somebody who's

not only lived through it but invested

through it on the way up and way down

professionally who's seen all the

emotions tied up with the bubble of 2000

and who's pulled all the cold hard data

and compared it then versus now this

Nvidia Le AI bubble to see if there

really is a pattern here I'm super

excited for it let's dive right into it

here's what I see we're going to talk

about six reasons why we are not in a

tech bubble so first thing NASDAQ 100

1995 to 2000 over a fiveyear period it

went up

12x whoa yeah and we're wait till you

see these charts NASDAQ 100 this 5year

period 2018 to 2024 we're up 3x so 3x is

a good return but it's definitely not

12x number two valuations the NASDAQ

Composite PE in March 2000 was

175 the current NASDAQ PE today is 42 so

if we just look at valuations the

valuation today for the NASDAQ is 76%

lower than it was in 2000 we're going to

talk about some parabolic stocks we're

going to look at IPO activity and then

the big comparison that that I've heard

for over a year now is a lot of people

like to compare Nvidia to Cisco and they

say that you know Nvidia today is Cisco

back in 2000 nowhere near close we're

going to go through the math and then

we're going to talk about profitability

so I want to get started with these

charts I said that not only do I think

that this is not a bubble I said but I

think that this is probably going to go

on much longer than most people think

because these Cycles generally don't end

after a few months it's one thing to

have an opinion

but the numbers really tell the story so

this is a NASDAQ 100 chart

1995 to 2000 and if we take a look in

the bottom leftand corner we can see

1995

37996 the so we'll call it 400 for

simple math over five years we went from

400 to the peak

4,816 this was March 10th of 2000

so from 400 to 4,800 that's a

12x

run in five years and three months so

what I wanted to do is let's take a look

at today's NASDAQ 100 let's take the

same fiveyear look back period and see

how do we compare so this is 2018 to

2024 what I want to do just to be fair

is I want to take the very lowest number

that I can find so we can compare the

run so from

5800 to

17962 that's a 3X run now 3x is nice

over five years but keep in mind

95 to

2000 12x run so if huge difference yeah

so if if we were at the same level today

that the bubble Top in 2012 X the NASDAQ

100 would need to trade for 70,000 right

now yeah very different from where it is

today and Alex here's another

interesting thing if if we take a look

at the nasac 100 today so we're just

under

18,000 right now if we look at the peak

in

2021 we can see the the peak in 2021 was

16764 so so we are less than

8% above the highs in 2021 and I just

think it's difficult to call something a

bubble when it's only 8%

7% over the prior high does that make

sense that does and it's also important

to understand like how much time has

passed since that prior high for

earnings to catch up to these valuations

right so it took well over a year to

reach a new high and in that time these

companies have been growing they've been

adding more to their bottom line they've

been adding more customers right right

Apple's making more money Microsoft is

making more money all these companies

are are making more money as as the

prices going up on the NASDAQ 100 and if

we go back to that chart for a second

you can see from

[Music]

1999 to 2000 this was maybe 15 months

the NASDAQ 100 just it more than doubled

so if the prior Peak was 2500 you're up

at 4,800 I mean just imagine if if the

NASDAQ 100 today doubled in a 12- month

period that's that's what a bubble feels

like yeah yeah completely different

exactly right exactly right so the the

first Viewpoint 12x versus 3x we're

we're just really not anywhere close as

far as the actual move in the market

market so the second thing I want to

take a look at valuation so we're going

to compare NASDAQ Composite March

2000 versus the same thing NASDAQ

Composite today the NASDAQ Composite PE

in March 2000 was

175 the current NASDAQ PE today is 42 so

once again if we're talking apples to

apples we are

1/4 of the valuation in the NASDAQ

today versus at the top in 2000 so just

to give you an idea if if we were at the

same level the NASDAQ today would need

to be at 64,000 and right now it's at

16,000 the

NASDAQ 100 would need to be at least

four or five times higher than it is

today exactly right four times higher

four times higher than it is today right

and by valuations the PE

we're still another factor of four off

right right so whether we're going by

Price or by Price divided by earnings so

far we are nowhere near the.com bubble

levels of 2000 right yeah big difference

here now here's the the next thing the

next point that I wanted to look at

because everybody I think by now is

familiar with super micro smci it's gone

on a really strong run it's been a very

strong stock but Alex here's what I can

tell you in in 988 99 we had 20 super

micros and I'll tell you what I mean

this is from The New York Times and what

this shows this talks about

1999 Qualcomm Rose

2,619 per so it went

26x just in 1999 and and wait till you

see some of these charts that I'm going

to show you 12 other stocks went up at

least

1,000% and a further seven issues went

up at least 900% so you had 20 stocks

that went up

900% or more in one year that is massive

it's that's nuts are these stocks like

from all over the place or are these

like All Tech like what kind of stock

okay were all Tech and we'll take a look

but they were all Tech they were all

internet related so this is from CNET

and this shows if we look here top tech

stocks for1

1999 Qualcomm

26x broad Vision went,

1400% veras sign I think they might

still be around that that was up almost

1200% arm Holdings I wonder if that's

the same arm it is yeah arm's been

public like several times it's been

public then went private then got

acquired then public again okay yeah I

think it's the same arm yeah so that was

up

1,00% all of these stocks were Tech

related internet related some type of

Doom but keep in mind super micro today

that's the the home run hitter super

micro over the past year would barely

crack this top 10 lineup okay so what

about the other stocks like Nvidia and

every other stock that people are

associating with this so-called AI

bubble so in Nvidia over the past year

nvidia's up about

245 per so it wouldn't even be close to

any of these stocks that's an

interesting fact the comments that I see

a lot are this is an Nvidia Le bubble

and sort of what you're saying is NVIDIA

doesn't even meet the criteria to have

this be called a bubble if we're

comparing it to 2000 right Nvidia really

wouldn't even be a blip on the screen

back then so here here's what I mean by

parabolic stocks this is micro strategy

and this is the same micro strategy

that's still around right now this stock

went

45x in a 12-month period 45x so

400% in a 12-month period correct so if

you put $1,000 into it in the middle of

99 your investment was worth

$45,000 less than a year later that is

insane yeah if you put if you got lucky

and you put 10 grand into it you had

450,000 so we're we're talking about

what super micro going going 10x micro

strategy went 45x

Qualcomm went

4200 in 18 months so if we take a look

in 98 October it was trading at a $150

in change

$65. 39 at the peak so this is a 40

2 100% run your your 1,000 would turn

into 42,000 in 18 months and and Alex

I've got to tell you I was in these

stocks I used to I used to trade these

stocks and every single day just imagine

if you had a stock today that went up

4200 per in an 18month period I can't

imag yeah I'm I'm living in the wrong

time man yeah listen the here's the good

news the good news is that I had some

qualcom on the way up the bad news is I

also had some qualcom on the way down

and I thought it would be a good idea to

buy the dip now keep in mind I just

started in the business I think at the

time I was 29 years old and I didn't

really know anything about anything but

when I got started so I started right

about here everything just went up and

we were conditioned just by the dip just

by the dip because it's going to keep

going up so once things started to go

down we just kept buying the dip and we

bought it all the way down and and it

cost a lot of money which by the way is

still largely the message that most

retail investors get today so I'm glad

you're sharing that because that is

something that I think is really

powerful to hear right and the best way

to get better as an investor is to hear

that and understand that you need to

adjust your own strategy accordingly you

know so I'd love to hear a little bit

maybe for a couple minutes just just

what did you learn since then what are

you doing differently now big big

difference great question so I started

to trade here made a lot of money gave

it all back and and once you blow up

your trading account which is what I did

I had no more money left to trade so

this was back in 2002 so I I took a

break from trading for a couple of

months and then I sat down and and I

wanted to figure out just where it went

wrong because

it wasn't Alex it wasn't just me it

wasn't just the the people that I worked

with it was everyone maril Lynch Janice

had a fund called the Janice 20 fund

they might still have it right now maril

Lynch rolled out a product called the

focus 20 it was a u and it was just

basically 20 tech stocks you know norell

and Cisco and these things lost 8090

cents on the dollar so it wasn't just

new investors it was wasn't just the

retail investor so what I decided to do

I wanted to figure

out what could I do again so that I

would feel safe investing my money again

and not go through the same thing so I I

eventually discovered technical trading

I've got a technical process that I

follow that I've worked on for over the

past 22 years right now that I'm very

proficient with it I use moving averages

quite a bit and the key thing is no

matter how good a stock is if I'm

holding a stock and it closes below the

200 day moving average then I sell the

stock I can always buy it back if it

goes back up I looked at these charts

like Cisco and and JDs unase and Intel

and what I found is if the only thing

that I did was just sell those stocks

when they broke the 200 day moving

average and I didn't buy anything and I

didn't buy them I didn't try to found

the bottom I realized if I did that I

would have probably saved 50% 60% of my

capital and that's that's why I use

right now a 100% technical process sure

no that's that's super interesting yeah

so getting back to you know the dot

bubble versus the AI bubble let's talk

about some of these parabolic stocks

yeah let's take a look at today so we

had a quick one JDS unase Alex this was

just 3818 months I shouldn't even be

bringing this one to the table it only

went up 38 fold but here here's where we

are today so I took this information

from finviz and what I wanted to do to

to be because keep in mind I want to be

100% objective I don't want to cherry

pick I want to just take Apples to

Apples so I went into the screener and I

went for the loow hanging fruit so

there's

2,370 stocks in this fin viz database

over 1 billion market cap so I took

stocks that were $1

billion market cap or higher and I took

the top 20 performers so over the past

12 months here's the top 20 performers

so here's super micro up

1,7% over the trailing 12 months the

only stock that's ahead of that is a

very small biotechnology stock $1.4

billion market cap but keep in mind this

stock is up

2400 over the past year which means when

it started this run it was probably what

a $50

million or a $60 million stock so it was

really a micro cap yeah tiny very small

but here's the thing top 20 stocks

remember in

1999 we had 20 household names common

tech stocks 20 20 stocks that were up

900% plus if we go back right now we

only have two stocks that are up 900%

plus and one of them is is a speculative

biotech and the key thing if we go back

on this list you'll see that there's

seven or eight of these stocks are

really biotechs so it's not really the

same Apples to Apples speculative

biotechs versus stocks that were were

very popular back in the day that's a

great Point too so basically what you're

saying is for an AI Le bubble a lot of

the stocks today certainly aren't even

AI stocks correct when I look at these

stocks super micro that's a tech stock

that I think we're all familiar with

Giga Cloud technology that's a very

popular stock I think it's the IBD

number one in their top 50 but then

we've got biotech biotech clean spark in

the in the Bitcoin miners but that's up

400% 500% now keep in mind those are big

moves those are great moves but these

moves are nowhere near 20 stocks up 900%

over the past year I I would say you've

got one you've got super micro so so far

the index is one quarter of the price it

would need to be to be a bubble the

index's valuation so it's pric to

earnings is about one quarter where it

needs to be for it to be a.com Style

bubble and for being an AI Le bubble

there sure aren't a lot of AI stocks

that have made big moves at all and big

is relative because these big moves that

we're looking at today are still much

smaller in order of magnitude smaller in

fact than the moves that many more

stocks that were already bigger made

during the dot bubble do I do I have all

that right so far you you have it

exactly a th% right cool I'm actually

spending a lot of my time just listening

and absorbing like I hope that this is

as useful for the audience as it is for

me because for me yeah go ahead you you

know why and just to take a second the

the key reason I wanted to put this

together I have subscribers on my

website I've got a lot of followers on

Twitter and a lot of people reach out to

me or or they get they get worried

they're like Larry I'm worried that

we're in a bubble so what I wanted to do

because I know in my head that that this

this right now does not feel like what

that felt like what that felt like that

was like being at the Vegas casino maybe

you know the slot machines it was Alex

stocks would go up 100 points a day if

you remember the moves that we had in

super micro uh a couple weeks ago after

earnings when it went from like 370 to a

th000 we were we were having those moves

for a year and a half in 20 30 40

different stocks so when I look at when

I look at Super Micro I'm like hey you

know that that's a that's a great stock

but we just had that every day I mean

that was just par for the course back

then that it's incredible how different

those two environments are and and I'm

glad you're pointing that out right yeah

because in 2000 a large part of my

audience myself included to be honest we

were still in school or at least not in

any sort of financial position to be

watching the stock market to the point

where we're sweating about price action

one way or the other right so hearing it

from somebody who's been in both places

then and now it's great to hear

firsthand yeah it's and and sometimes I

talk to my friend when we talk about the

good old days and now keep in mind those

stocks would also go down 100 points in

a day too so you really you really had

to learn to to manage the volatility but

that's why I really don't get rattled

when I see these moves now we're going

to take a turn to the real speculative

froth so this is something that we

haven't even seen right now and I want

to talk about the IPO frenzy this was in

in

1999 and we're we're going to look at

some big numbers in a minute but the

average internet IPO ended the year

266 per above it its offering price

compared to for non- interet related

IPOs a gain of

59% at the end of the year so if you had

an internet IPO on average you were up

266 per non- internet IPO 59% % so about

a 400% greater return if you were

internet related which is really

interesting we see parallels like that

today right so back then I imagine if

you just changed your name from company

X to company x.com right you saw much

bigger multiple right and what we're

seeing and what we're seeing today x.com

AI instead of x.com to do the same thing

right convince investors you're some

sort of AI company they give you a

higher multiple they they had stamps.com

uh pets you know web van.com where

they're going to deliver groceries

basically this is the IPO frenzy so this

is from a University of Florida study so

what this shows in

1999 there were

446 total IPOs the average first day

return was was just over 70 per. if you

go back the five years before that it

was right around uh

16% 15% 133% then all of a sudden 98 21

99 70% so your average first day was up

70% it it gets better so this is this is

the slide but we put this into a

spreadsheet format to make it a little

bit easier to read so the slide just

quickly for your viewers this is from

the same University of Florida a study

it can be found online but this shows

the top 10 first a pops so the top 10

IPOs average first day return plus

54% first day Wow first first day so and

here's the math so VA

Linux the offering price was $30 a share

it closed the first day $23 9 so up

697 and we did some research I couldn't

find any IPOs whatsoever over the past

year remotely close to this I don't know

if if you off the top of your head know

of any no not at all and I mean now it's

so obvious why there were over 440 IPOs

in a single year back then more than one

per Market Day right even if you start

including things like the fed's interest

rates we are not even close to that

level of IPO activity today right I I

couldn't find we did all the research

but so the globe the globe.com at the at

the

time this was the IPO so

1998 it went up

66% first day and and this was the one

that really got everybody's attention

CNBC was doing coverage all the time

Fortune Magazine everything was a

brokerage commercial but this was the

one from from what I remember that

really started to ring the bell and then

you can see Foundry networks 525

57% aamai technology still at is is a

stock that trades right now that was up

4 58% but that's the top 10 average

first day return plus 500% and and Alex

it didn't matter if they had a business

plan I I would venture to say that that

most of these companies at the time they

came public weren't profitable were not

profitable from what I can remember I've

never seen anything like it I honestly

don't think that I will ever see

anything like this again I don't think

we're I don't think we'll even see that

this time so let's let's double click on

that point for a second you're talking

about companies that don't have business

plans companies with low to no earnings

how does that compare to today you know

are we seeing the same sort of thing for

example stocks with crazy PE ratios can

you walk us through the comparison then

versus now absolutely so a couple things

most of these companies didn't have PE

ratios because they didn't have any

earnings so we're we're going to go to a

company in in just a minute and then

we're going to come back to your

earnings question because I do have that

on a slide so what this shows number of

IPOs that doubled on the first day 1997

there were two all year 98 there were 12

all year in 19 1999 117 IPOs doubled on

their first day of trading wow and if

you add the first quarter of 2000 there

was another 48 so if you look on this on

this graphic here also from the

University of Florida in five quarters

there were 165 IPOs that doubled on

their first day and I don't think Alex I

couldn't find one right now one IPO that

doubled on the first day in 2023 now it

it might be out there and maybe we

couldn't find it but I couldn't find one

definitely not 165 no for sure that is a

great point you know IPOs today we're in

a different IPO environment than we were

in 2000 for sure but still you would

expect great companies like for example

arm yeah right Nob brainer at the heart

of the AI Revolution especially on the

INF inside for Edge devices arm is a

major player in AI at the hardware level

Nvidia another one didn't IPO but still

we're talking about these companies that

are leading the AI Revolution not coming

anywhere close to these kinds of price

moves or multiples right we're not even

close and we're going to take a look in

a few minutes what what we did was we

went back and we did the homework and we

dug up the annual reports for the top 10

companies in the NASDAQ 100 March 10th

of 2000 at the top and what we did was

we charted out what did they do for

revenues what did they do for earnings

and how does that compare with today and

we're going to take a look at that in

just a few minutes but I wanted to

answer your prior question so this is a

headline from

CNN July of 2000 and what this shows

there was a fiber optics company called

corvis they raised a billion dollars in

an IPO but it says the company managed

to obtain a

27.6 billion market cap with no sales

with no sales no sales so forget about

earn forget about having earnings they

had no sales they had two customers that

had that said they might buy $400

million of equipment from them might buy

over a two-year period so this was a

company 20 7 billion market cap no sales

so when we talk about speculative stocks

today that doesn't even come close to

the type of speculation people were

doing no in 2000 right like like I have

two maybe customers right now and I

certainly am not valued at$ 27 billion

right here here's what it was what what

Wall Street figured out was everybody

wanted these stocks so when I was a

broker broker at maril Lynch the way it

worked is maril Lynch and this is all

brokerage firms everywhere you would get

allocated so many shares so many IPO

shares you'd let your best customers get

these IPO shares because let's say I'm

your broker you're you're a big client

of mine and I put uh the globe.com you

know we buy some globe.com at thepo and

it's up 600% on the first day you're

going to do business with me probably

forever and it didn't matter to anyone

that these companies didn't have

earnings it didn't matter that they

didn't have sales because everyone was

just making so much money that they just

wanted to get public as fast as you

could which is very different from what

we're even seeing today right

everybody's being super cautious about

going public if we get to a phase where

you start to see a bunch of startups

start to come public and they've got AI

in their name where AI is their business

plan the way that a real bubble works is

you need to get that that IPO frenzy and

we haven't seen it yet I'm sure that we

will at some point but we just haven't

seen anything even close to it sure and

you know we spent a lot of time talking

about IPOs but don't forget that's

that's just one point out of four so far

right right the index the index is

priced to earnings or it's multiple

we've talked about specific stocks going

parabolic then versus now what parabolic

means and what kind of stocks are going

parabolic right and now IPOs right so

I'm hoping we can cover what I get as

the most biggest comparison next which

is NVIDIA versus Cisco right yes yes and

and you know it's one thing to talk

about companies that are gone that

didn't make any money let's talk about

the the heavy weights let's talk about

the backbone of the current stock market

and obviously we've heard the Nvidia

versus Cisco comparisons so we did some

math and here's what we we found out

Nvidia for fiscal year 2024 which just

ended their net income was $ 29.7

billion so over the past 12 months they

put $ 29.7 billion to the bottom line if

we look at Cisco their best

year fiscal year 2000 they put to the

bottom line 2.6

billion so Nvidia last year that we just

came out of made 11 times more net

income than Cisco did in their best year

but here's the best part last quarter

Nvidia made more money in 20 days last

quarter than Cisco made the entire year

fiscal year 2000 at the very top so even

accounting for inflation these companies

are incomparable

not not even not even close and that's a

good point because Cisco at one time was

the was the biggest stock in the market

they had over a$ 500 billion do market

cap at their Peak but Cisco's PE at the

very top was

196 500 plus billion dollar market cap

made two and a half billion if Invidia

today traded at the same PE

196 that Cisco had at their top Nvidia

would be a $5.8 trillion market cap or

it would be about twice as big as what

Microsoft is right now that is insane

and honestly only about three times

bigger than it is today which is really

funny but it would be nearly a $6

trillion company correct right that's as

as high as some valuations have gotten

we we haven't really seen anything like

that in fact companies are just starting

to crack the three trillion dollar Mark

for the first time yes so yeah here's

the key thing is nvidia's PE today is

actually lower than when it started this

run people talk about Nvidia is a bubble

so we took this from finviz and I want

to take a look at the metrics so what

this shows is that for the past 12

months nvidia's stock is up

23.47% trailing 12 months up 230% but

earnings per share is up

764 per. and then this is for the entire

year so the entire year of 23 versus

fiscal year 24 up 586 per. so the key

thing is that the stock price has not

gone up anywhere near as fast as the

earnings growth that's right and what

you would see in a in a real bubble

would be actually the opposite where

let's say maybe the earnings went up 40%

and the stock goes up 200% do you see

what I mean yeah we would expect higher

multiples if this is a bubble right and

we don't know what's going to happen in

five years we don't know what's going to

happen really in in five days but when

when they look at what the growth is for

the company right now what their Market

is they've got gross margins of 72% is

what it shows here just huge huge huge

numbers so for NVIDIA to be up

230% over the past year but sales and

earnings are up 265 per 764 per. the

it's to me it that's not anything that

looks unfairly valued yeah their their

multiple is actually shrinking if

anything right their PE like you were

saying earlier is lower today than it

was at the start of this run right I

I've never I've got to tell you this

Nvidia is the number three market cap

stock in the market 1.9 trillion I've

never seen a company anywhere even close

to the size of Nvidia that has has put

up these numbers as fast as they have I

I think it it's it's got to be a record

for a company that's this big to have

grown their their sales and their

earnings so fast because keep in mind

they did 60 billion in sales but they

put almost half of it to the bottom line

that's that's an unbelievably High

number they're printing cash yeah oh

give myself a single pat on the back

here this is why it's so important to

understand the science behind the stocks

because if you were watching my channel

18 months ago you saw this from the

technology side before it hit their

balance sheet when we were talking about

nvidia's undisrupted moat the way they

are the kings of parallel Computing and

how the AI Revolution is going to be

powered by gpus right and

accelerators now we're just seeing it in

the bottom line it's great to come full

circle and see this for sure yeah really

it's just great job on your that's how

that's how you and I connected because I

was watching your videos and I said wow

this this guy has he's got the best

videos the most detailed videos that

I've seen but in the year

2000 it was about the promise of

profitability if we take a look at Cisco

and we dug up their annual report so

this is fiscal year 2000 they did 18

billion in sales but they only put to

the bottom line 2.6 billion so if we

compare apples to apples Nvidia just put

11 times more to the bottom line now

Cisco was not even the top earning stock

so in 200000 what we saw was price over

earnings skyrocketing P went way up what

we're seeing with Nvidia is e is going

way up and price is following it right

so the price to earnings ratio is

staying roughly the same if not getting

smaller because earnings is going up

their margins are high they're making a

lot more actual money and getting it to

the bottom line that's why their

valuation is climbing so fast correct

they're yes they're the earnings for

NVIDIA have gone up much faster than the

stock price has and that's why the stock

is moving so much what we did was we

went back and I've got the the data for

this we'll look at that in a second the

NASDAQ 100 the top 10 stocks at the very

Peak March 10th of 2000 so you're going

to see some interesting names Microsoft

Cisco Systems Intel Oracle Sun Micro

Systems is gone Dell is is still here

Qualcomm Yahoo Applied Materials and JDS

unase versus our top 10 today Microsoft

and this is as of yesterday Microsoft

Apple Nvidia Amazon alphabet meta Tesla

broadcom asml and AMD but here's the key

thing in in

2000 if you look at the top 10 stocks

the number one company for Revenue was

actually

Intel 33 billion in Revenue which is a

very good number

if you look at the current number three

right that's Nvidia 60 billion 30 29.7

billion but if you add up the top 10

March 2000 the top 10 in the NASDAQ 100

total

revenues 148 billion but if we add up

the top 10 total revenues today it's 1.8

trillion the revenue news for our

current ndx top 10 is 12 times greater

than what the revenues were in 2000 but

the price of the NASDAQ 100 itself is

only up

370% so sales have gone up 12 fold but

the price of ndx right now is up 3.7

fold so yeah like you said the price has

not gone up as fast as the sales have

which which means basically if we were

in a bubble we would expect the price to

be four times higher right right if we

were in a in a comparable bubble we

would expect the price of the NASDAQ 100

to be a lot higher and here's here's

another key point and there there are so

many the one of the biggest differences

that I see today is in in the year 2000

the these companies like Cisco and

Oracle and Sun Micro Systems all of

these companies that are in this group

they were selling you know all those

IPOs that we talked about that went up

600% and they didn't make any money yeah

well those were the customers of Cisco

and Intel and Oracle they were selling

to you know the globe.com they were

selling to VA Linux that was their

customer base their best customers were

companies that really weren't very well

capitalized they had a lot of venture

capital money but they didn't have a lot

of sales so the problem what happened at

the top here was Cisco Systems they

loaded up on all this Telecom equipment

and then guess what happened their best

customers went out of

business what what we've got right now

when when you look at the quality of

these companies

Microsoft made 82 billion last year

Apple 100 billion meta 39 billion so

some of the biggest customers for

nvidia's gpus Meta Meta is one of their

biggest customers Tesla is one of their

biggest customers look at the financial

stability meta made 39 billion over the

past 12 months guess what meta is not

going out of business so the difference

today is the

customers for these

gpus are are liquid some of the highest

quality companies in the world back in

2000 a lot of these companies that were

buying the gear from Cisco and Sun micro

these were were upstart companies that

didn't have any real Capital that's such

a great Point like it's not just the

quality of earnings it's the quality of

customers too I'm going to steal that

and use that in tons of videos because

yeah I mean Jensen was meeting with a

government officials so there there's a

thing right now called Sovereign

AI where entire countries have made the

decision that they have to build out an

AI Network right away if we look at the

news yesterday Apple decided to scrap

their EV business and they're shifting a

lot of those people to to generative AI

but when you're talking about Apple

making a major commitment to it when

you've got entire countries that have

committed to build out these AI systems

Alex they've got unlimited money it

makes sense technologists talk about

generative AI as if it's the next phase

of the internet yes right so can you

imagine being a country and saying nah

we're not participating in the next

phase of the internet or anyone yeah the

this is not a bubble from a technology

point at all it's it's the next chapter

in The Saga of computing and what we're

seeing is governments catching on giant

companies like apple catching on and

there's only one company right now

really providing the heart of that

infrastructure yeah and it's Nvidia and

the difference between then and now is

Cisco was sort of providing it to

anybody that said they would want it

whether they could afford it or not

right Nvidia charges them charges

$40,000 per GPU they have an insane

premium because they don't have any

competition right and people are paying

that if I'm buying a $40,000 GP GPU it's

because I think I can make more than

$40,000 on it right look at the problems

that Google's having right now that

alphabet's having because of their

struggles with Gemini and with Bard and

you know they they've had problems since

day one with Bard giving out bad

information now they've got problems

with Gemini and alphabet right now I

mean the stock price shows it the CEO is

under a lot of pressure and this is just

one company because they haven't gotten

AI right yeah yeah to your point look

what it's costing them and they're not

building that Hardware themselves either

they're buying it from Nvidia and and

here's the thing

because and Apple's a great example I

think I think Tim Cook's announcement

came at the right time yesterday here's

what it is Apple thought that they

wanted to get into the electric vehicle

business right the the EV business is

not their core competency it's it's

electronic devices so when it comes to

gpus you know AMD they've got they've

got a product that's going to do I think

it's expected to do about 5% % of the

sales of what Nvidia does there's talk

that Microsoft wants to make their own

gpus and meta might make their own gpus

but keep in mind yep it it's such a huge

barrier to entry you know Nvidia has

such a technological lead that guess

just like apple figured out that they

probably weren't best served to try to

make electric vehicles you know Meta

Meta is probably not best served to try

to figure out how to make a GP you

that's going to compete with Nvidia

because guess what it's it's just not

going to happen who's going to beat

Nvidia at their own game I don't know

that's right and it's not about

competing with Nvidia today it's about

catching Nvidia overall in the race so

there's no question that Google

Microsoft meta could eventually make a

GPU as good as what Nvidia has today the

question is by the time they're able to

do that how good will nvidia's current

gpus be right right just like we don't

expect that Nvidia is about to turn

around and make the next Facebook or

Instagram tomorrow or or I mean what

would it say if Nvidia wanted to try to

make an iPhone yeah we would be saying

the same thing about Nvidia there's no

way they're going to catch Apple there's

no doubt they could make an iPhone right

but by the time they come out with it

how good will Apple's actual iPhone be

right it's the same thing here I just

don't see anything and when I go on

Twitter someone will come in and say oh

you know this is a bubble and I'll ask

them you know what data what actual data

data are you looking at today where you

could compare today's market to 2000 and

say it's a bubble I want to be

open-minded because as I said I've I've

got a a subscriber base and they rely on

me for objective information and if it's

good it's good if it's bad it's bad but

I need to tell them you know the actual

facts that I see based on my experience

and that's what I'm sharing with you

tonight I have the same thing here and

it really keeps me up at night because

the more comments I get the higher

prices go the more comments I get that

were in a bubble and the more I stare at

my ceiling late at night and I worry are

my convictions wrong when I talk about

companies like Nvidia and Qualcomm and a

lot of the same companies like Microsoft

and Qualcomm that were even around

during the tech and Telecom bubble and

and here's the thing and and I want to

be very clear for you and for your

viewers I'm not saying that these stocks

can't go down I'm not saying that the

NASDAQ can't go down anything can happen

to make stocks go down at any time but

what the only thing that I wanted to

look at is is this a bubble based on the

definition of what we saw in the year

2000 and I don't think that there's any

number that even compares to it sure and

you know just like stocks can go up 40

50% a couple hundred percent and it not

be a bubble stocks can go down 10 20 30

40% and not it not be a bubble popping

right exactly so exactly you know a

little bit of nuance goes a long way

here right and I live through it you

know how you talk about staying up at

night I used to stay up at night every

night because uh back then in in 99 2000

listen I remember one day I was on

margin I was in this stock called ulex

which was a big day trader stock back

then and there was like a a false report

that I think they had missed earnings or

accounting fraud the stock was down like

40% pre-market and I was on margin and I

think I lost like three month salary

just that morning and I was like like

physically sick I know the feelings that

you have the one thing that I'll say the

people that I've talked to that are

calling this a bubble weren't trading in

the markets back then because the people

that I do talk to that that were trading

back then they don't they don't call

this a bubble but we did our own

research so when we were comparing the

stocks back in March of 2000 we l I had

the research team literally go you can

see this is from Intel's website we

literally went to every company's

website and pulled up their actual

numbers so when when I discussed these

numbers with you we we didn't just take

this off Google we actually did the leg

work and pulled the numbers ourselves

and that by the way doing that is super

important you know we have a small

research team for tier symbol U we do

the exact same thing we start from the

bottom up we go directly to the source

right and we put together our own ideas

about what is going on with the

technology of these companies how

defensible that technology is and how we

expect that defensible technology to

turn into profits and ultimately affect

their bottom line and return money to

shareholders ERS so when we get it wrong

it's because we got it wrong but when we

get it right it's because we got it

right and so that's important for a lot

of reasons one of which is just having

another independent data point to come

to your own conclusions yeah so why

don't we quickly summarize everything

that we've covered so far because it has

been a lot it it has been so quickly we

looked at the charts in 2000 the NASDAQ

100 went 12x over 5 years years today

it's gone 3x so 1/4 of the move the PE

at the peak was

175 the PE today is 42 once again 1/4 of

the valuation when we talk about

parabolic stocks there were 20 stocks

that went up by 900% or more and we

looked at the micro strategies and the

qualcom up 42x and 45x whereas the

closest we've got right now is super

micro I do think Super Micro is up about

17x off the dead lows and that's that's

the number one stock but it it's nowhere

near the 45x or the 42x and and it's

nowhere near 20 of these stocks up over

900% over yeah would almost have to

Triple again to those levels right

that's that's that's absolutely correct

this we talked about the IPO activity

this was this was just really the

biggest thing these companies came

public so fast they ordered all this

gear Cisco made all this gear then the

companies went out of business and then

Cisco was stuck with all the gear same

thing with sun micro we talked about

Nvidia versus Cisco and the key thing is

that if Nvidia traded at Cisco's Peak PE

then it would Nvidia would be a five 5.8

trillion market cap which would equate

in stock price to about

$2300 a share for NVIDIA yeah that's

insane and we also covered by the way

that it's not just nvidia's earnings

that are climbing like crazy they're

also incredibly high quality corre

because the companies that are buying

from them meta Google Microsoft Tesla

Amazon right these companies not only

are not going out of business tomorrow

they're some of the best compan compies

on the planet and they plan to take

these infrastructure Investments and

eventually turn a profit with them

exactly and then we looked at the

profitability and basically this isn't

like in 99 and 2000 where everything was

going to be dotcom and the companies

didn't have any money shareholders are

looking for cash flow meta just

announced that they're going to start to

pay a dividend I think Salesforce

announced tonight that they're going to

start to pay a dividend and and the key

thing is that these companies right now

those leaders of the NASDAQ 100 today

are

cashr and it's just a totally different

environment than what we saw in 2000

it's yeah this is definitely the kind of

research that I love seeing I love

sharing this is the kind of research

that I think can really change people's

lives I'm so happy you came on and you

shared all this with us Alex thank you

so much I'm I'm glad that you invited me

on I think it's a really important

message that you and I had to discuss

tonight and I'm glad that we were able

to get together yeah likewise uh you

want to tell us where we can find you

sure so my my Twitter ID is also the

same as my website so it's Blue Chip

daily so Twitter is bluechip daily and

my website also is bluechip daily.com

and if you visit our website you'll see

some of our technical analysis going

back about five years now that's awesome

well you definitely got a subscriber in

me and I'm sure we'll be working

together in the future and with that

until next time this is ticker simple

you my name is Alex and I'm joined by

Larry and we're reminding you that the

best investment you can make is in

you