DANNY
Crypto Commentary
NVIDIA could repeat Cisco's 2000 crash in 2026. Cisco was the face of the dot-com era and fell 86% from its peak even though everyone was right that the internet would change everything. NVIDIA is the face of the AI era, with the same narrative, euphoria and crowded trade, and its chart is following Cisco's path. Being right about the technology does not protect investors from being wrong about the price. x.comÂ
Semiconductors could stay undersupplied for a long time as more capable AI per dollar creates more uses and drives compute demand. Micron and NVIDIA trade at low forward P/Es because investors fear peak cyclical earnings, yet current earnings show no slowdown. Shortages may worsen as AI adoption spreads, though the industry could remain cyclical; a reversal of the forced rollover trade is hoped for, not assured. x.com x.com x.comÂ
Rising Chinese competition and doubts about valuations add to Nvidia's downside risk as the AI sector bleeds. Nvidia's break from an uptrending triangular pattern rarely ends well; the AI bubble is cracking, and the trendline break marks the beginning of something much bigger. x.comÂ
Nvidia is undervalued, not the poster child of an AI bubble. Cisco traded near 200x earnings at the dot-com peak, while Nvidia trades around 20x, about a tenth of that; even after Cisco's roughly 90% crash, its P/E was about where Nvidia's is today. Nvidia just delivered 106% year-over-year revenue growth and guided next year's growth above 70%, so the AI boom is not over. Unprofitable $100 billion-plus companies are better bubble candidates. x.com x.com x.comÂ
NVIDIA's use of vendor financing suggests it fears competition rather than expecting to win on its chips' merits. Cisco's experience is a warning about how that strategy can end. x.comÂ
NVIDIA looks close to the top of an AI bubble, with a two-year megaphone pattern signaling exhaustion of growth. Such expanding, volatile patterns historically don't end painlessly. Its roughly 22x valuation on a $4.8 trillion market cap and $216 billion profit is approaching Cisco's roughly 30x in 2000. Nvidia just raised $25 billion in debt, drawing $85 billion of orders. x.com x.comÂ
Nvidia in 2026 is not Cisco in 2000: it grows over 100% a year at far lower multiples, making it still an amazing buy and likely the first $10T company, possibly by 2028. Cisco peaked near 200x earnings, 30x sales and 176x FCF on 55% growth; Nvidia trades at 30x, 18x and 45x with 75% gross margins. Forward, it is about 20x earnings and 22x FCF, near all-time lows, and supply constraints and contracts let it guide a full year ahead for the first time. A $6T cap would not mean overvalued. x.com … Show more
Nvidia faces risks on both sides of the AI cycle. Vendor financing is a concern at the center of the buildout: strong AI sentiment brings competition, while weaker sentiment brings a slowdown. That makes it the largest holding of greatest concern. x.comÂ
Nvidia's AI profits are real, but its compute demand depends heavily on fragile venture funding. Per Chamath, 1% of firms account for 90% of AI spending, and 72 cents of each dollar comes from unprofitable VC-backed firms. Venture money passes through startups to Nvidia and cloud suppliers; if the next raises fail, concentrated orders could contract together. x.com x.com x.comÂ
Nvidia is still growing into its AI valuation, unlike Cisco in 2000, which was growing nothing but a tech bubble. The comparison between today's Nvidia and 2000's Cisco cuts in Nvidia's favor because its valuation is backed by growth rather than bubble pricing. x.comÂ
Nvidia's order book could collapse if its biggest customers cut AI spending, much as Cisco fell 90% in 18 months after the 1999 infrastructure boom. Microsoft, Google, Amazon and Meta are spending $650bn on AI infrastructure this year, which is effectively Nvidia's whole business model. If their CFOs find in Q3 that AI capex is not producing measurable returns, they cut, Nvidia's orders fall and so does 30% of the S&P 500. Timing is the only question. x.comÂ
