Eric, what about the argument that ‘big tech’ stocks like Nvidia are still undervalued for the long term, because they’re riding the AI trend? Eric:
It's true that the AI revolution does indeed have much further to go from here.
But it's also true that world-changing stocks eventually become overheated and enter severe boom-bust cycles of their own.
Just look at Microsoft in the 1990’s.
You could have argued it was still in its infancy with the internet wave, yet it cratered -63%, and took 15 years to break even.
So, while I don't dispute that Nvidia could be a long-term AI winner, I do want people to be aware of the cyclical risks involved here, at these crazy valuations.
Let's take a better look...
Because Nvidia is currently following the path that Cisco stock took in the 1990’s…
What do you see Kim? Kim:
Yikes.
It looks like Nvidia is following the same exact path of Cisco, and where it’s headed next, looks bleak.
Like Nvidia is on the verge of a major crash... Eric:
Yeah, and at the time, Cisco had nearly DOUBLE the earnings power of what Nvidia boasts today.
Yet, Cisco STILL crashed over -87% from its top!
The point is…
Nvidia has likely become one of the most overheated stocks we've witnessed in a quarter century.
Setting the stage for potentially catastrophic losses for millions of investors.
Just look at these cautionary headlines — Investor’s Business Daily asks...
CNBC says…
Yahoo Finance is reporting… Kim:
Absolutely frightening, Eric... but what about the other tech giants — beyond Nvidia?
Are you saying we should steer clear of names like Apple, Microsoft, Tesla, Meta, and the rest? Eric:
For now — without a doubt.
Those stocks are trading at sky-high valuations.
The uncomfortable truth is that ‘Big Tech’ is looking dangerously over-priced.
Tech stocks are trading at all-time highs relative to the S&P.
We’ve officially moved beyond the peak of the dot-com boom.
And if that isn’t a sobering reality, I don’t know what is.
But, Kim, at the end of the day, it all boils down to your personal risk tolerance.
