Jeremy James Siegel, an esteemed finance professor at the Wharton School, draws intriguing parallels between Nvidia (NASDAQ: NVDA) and Cisco (NASDAQ: CSCO) amidst the dot-com bubble era.
Siegel suggests that Nvidia’s shares could potentially experience significant growth, possibly doubling or even tripling, reminiscent of Cisco's remarkable trajectory.
Nvidia's stock has been a key driver in the recent stock market surge, fueled by the burgeoning AI sector.
The unprecedented demand for Nvidia's high-end chips, vital for AI services such as ChatGPT, has propelled explosive sales growth.
With their GPUs dominating the market, holding an estimated 80% share, Nvidia has garnered substantial attention and demand.
Their GPUs exhibit superior efficiency in AI-specific tasks compared to CPUs from competitors like Intel (NASDAQ: INTC).
Over the past year, Nvidia’s stock has surged by over 270%, outpacing the broader market with an 82% increase this year alone.
The comparison to Cisco during the dot-com bubble underscores the speculative fervor surrounding tech stocks during that era, where Cisco emerged as one of the most valuable companies globally.
Siegel's optimism about Nvidia's potential growth reflects its strong market position, technological prowess, and the increasing significance of AI-related technologies across industries.
However, investors are advised to approach such projections cautiously and conduct thorough research before making investment decisions.
Despite a recent 10% intraday drop, Siegel maintains bullish sentiment on Nvidia's momentum, foreseeing further highs similar to Cisco's trajectory.
He speculates that Nvidia's stock could potentially reach $2700, resulting in a market capitalization of $6.8 trillion, though he emphasizes that this is not a prediction but rather an exploration of possibilities in a mega bubble scenario.
Bank of America (BofA) maintains an optimistic outlook on Nvidia, reiterating a price target of $1100, asserting that even with a $2.2 trillion valuation, Nvidia’s stock remains reasonably priced.
However, Nvidia's rapid ascent has attracted scrutiny, particularly from competitors like Advanced Micro Devices Inc (NASDAQ: AMD), which has closely followed Nvidia's rise amid excitement over AI-related technologies.
The ongoing debate surrounding Nvidia's valuation reflects broader market sentiment concerning high-growth tech stocks amid concerns of a potential bubble.
Investors will continue to monitor developments in the semiconductor industry and Nvidia's performance in the coming months.