Nvidia may resemble Cisco before dot-com crash, but differences like strong AI market position.

From NASDAQ.: 2024-04-07 12:00:00

Nvidia investors warned of possible similarities to Cisco Systems 1990s crash, with both experiencing a big run-up before a significant decline, as seen with Cisco’s 77% drop post-dot-com bubble burst. However, qualitative differences point to Nvidia’s strong moat in AI chip market and organic growth opposed to Cisco’s acquisition-heavy approach.

Nvidia’s dominance in GPUs for data center AI and HPC workloads, with a 90% market share in data center AI GPU chip market and 80% in overall AI chip market, showcases its strong position. Founder-CEO Jensen Huang’s technical background and focus on generative AI drive Nvidia’s growth, contrasting with Cisco’s decline in profit margins due to competitive pressures.

Founder-CEO-led companies tend to perform better in the long term, favoring Nvidia over Cisco, with Huang’s technical background and strong moat through complex products and ecosystem contributing to Nvidia’s success. Nvidia’s organic growth strategy contrasts with Cisco’s acquisition-heavy approach, highlighting the different paths to success.

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