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He highlighted companies including Nvidia, Apple, Alphabet, Microsoft, Meta Platform and Micron Technology, noting that many companies are trading at unusually high multiples of their annual revenues.
According to Vembu, Nvidia is currently trading at around 20 times sales, while Apple, Alphabet and Microsoft are trading at around 10 to 11 times sales. Meta’s sales are around 7.5x, while Micron’s sales are around 19x.
To support his argument, Vembu cited comments made by Scott McNally after the dot-com crash in the early 2000s. McNally had argued that investors paying ten times the company’s annual revenues would need extraordinary growth and profitability over an extended period to justify such a valuation.
Comparing it with the technology boom of the late 1990s, Vembu said the current market environment is like “a crazy bubble” and could be even bigger than the bubble seen in 1999.
“Price to sales ratio (not price to earnings) for Big Tech is: Nvidia: 20x, Apple: 10x, Alphabet (Google): 11x, Microsoft: 10x, Meta: 7.5x, Micron: 19x,” he said. Revenue for 10 consecutive years,” Vembu said.
“This is a crazy bubble, bigger than 1999,” he said.
His comments come as AI-related stocks, particularly semiconductor makers and software companies, continue to rally on expectations that artificial intelligence will deliver substantial growth and productivity gains across industries. The AI boom has propelled many technology giants to record market capitalization and helped push major stock indices to new highs.
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Price-to-Sales Ratio (Earnings-Price-Not) for Big Technology:
1. Nvidia: 20x
2. Apple: 10x
3. Alphabet (Google): 11x
4. Microsoft: 10x
5. Meta: 7.5x
6. Micron: 19x
As Scott McNally of Sun Micro said in 2002: “At 10 times revenue, to pay you ten years, I would have to pay you 100% of revenue for 10 consecutive years…”
It’s a crazy bubble, bigger than 1999.