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Microsoft Corp. (MSFT), Alphabet Inc. (GOOGL), and NVIDIA Corp. (NVDA).
Three companies that have seen their market capitalization go from $3.1 Trillion to $5.1 Trillion since the beginning of 2023.
For all investors that's mind-numbing and exciting. The kind of movement that you want to make sure you are a part of. You know, FOMO.
For others, including myself, it's a little scary. It evokes memories of another market cap explosion that happened 25 years ago.
Yes, I'm going to go there, the dot com bubble.
I'm going there because, at my core, I feel there is a difference. At least for now.
It all has to do with how bubbles are constructed.
First and foremost, bubbles start with innovation. Something that changes the way we do business, how we work, how we live, and everything else... Forever.
The last time that we saw something like that was in the 1990s. Not in 2000, but earlier.
Like Artificial Intelligence, the Dot Com Bubble was deeply rooted in the semiconductor industry. At that time Intel was at the core of the technological innovation that changed everything.
The increase in computing power and efficiency led to desktop computers everywhere. In offices, on factory floors, and in our houses. Put simply, this increased productivity by multiples of hundreds and thousands.
That productivity overflowed into incredible economic growth until it popped.
I remember the cries of a "bubble" in 1997. But it didn't happen. Call it a "pre-bubble", but it wasn't the catastrophic event that everyone was calling for. Not yet.
The same is true of AI today, but we're still in the early innings of a regulation nine-inning game.
Check the chart below.
As I mentioned, Intel was at the genesis of the Dot Com boom. Their chips led to a production boom while also blazing the trail for what would become the Internet. Sure, you need Cisco Systems Inc. (CSCO), Dell Technologoes Inc. (DELL), Microsoft Corp. (MSFT), and others to get us to the full-on internet, but Intel is a great "poster stock" of the era.
While impressive, the chart above is only about three innings into the game. The stock went from $2.50 to $15 in a three-year period ending in late 1997. A 500% increase in value.
It's a pretty close image of the chart that we're now pointing at as the "poster stock" of the AI "bubble" potential, NVIDIA.
Like Intel in the 1990s, NVIDIA has spent the last three years rallying from $100 to nearly $500, a 400% move higher.
And like Intel in 1997, NVIDIA shares feel a little toppy and ready to fall a little from its lofty valuations. That's where I see the long-term AI Opportunity.
The charts and the story are uncanny in their similarities.
So what's the rub? What do you get out of this?
Here's the "rest of the story" for the late 1990's on Intel.
Do with this information what you will but remember Intel went through a cycle as you can see above - it …
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About the Author
Chris Johnson is a highly regarded equity and options analyst who has spent much of his nearly 30-year market career designing and interpreting complex models to help investment firms transform millions of data points into impressive gains for clients.
At heart Chris is a quant - like the "rocket scientists" of investing - with a specialty in applying advanced mathematics like stochastic calculus, linear algebra, differential equations, and statistics to Wall Street's data-rich environment.
He began building his proprietary models in 1998, analyzing about 2,000 records per day. Today, that database, which Chris designed and coded from scratch, analyzes a staggering 700,000 records per day. It's the secret behind his track record.
Chris holds degrees in finance, statistics, and accounting. He worked as a licensed broker for 11 years before taking on the role of Director of Quantitative Analysis at a big-name equity and options research firm for eight years. He recently served as Director of Research of a Cleveland-based investment firm responsible for hundreds of millions in AUM. He is also the Founder/CIO of ETF Advisory Research Partners since 2007, noted for its groundbreaking work in Behavioral Valuation systems. Their research is widely read by leaders in the RIA business.
Chris is ranked in the top 99.3% of financial bloggers and top 98.6% of overall experts by TipRanks, the track record registry of financial analysts dating back to January 2009.
He is a frequent commentator on financial markets for CNBC, Fox, Bloomberg TV, and CBS Radio and has been featured in Barron's, USA Today, Newsweek, and The Wall Street Journal, and numerous books.
Today, Chris is the editor of Night Trader and Penny Hawk. He also contributes to Money Morning as the Quant Analysis Specialist.