NVIDIA Proves AI Is Not the Dot-Com Bubble

Charles Payne, host of Fox Business, argues that AI is not the same as the dot-com bubble. He points out that NVIDIA's earnings prove this by showing strong revenue growth and a high price-to-earnings ratio. In contrast to Cisco Systems' valuation in 2000, which was based on speculative revenue from money-losing dot-coms, NVIDIA's customers are profitable enterprises with contracted AI revenue.

NVIDIA's most recent quarter saw $81.615 billion in revenue, up 85.23% year over year, and a non-GAAP gross margin of 75.0%. Data Center revenue alone reached $75.246 billion, up 92% year over year. NVIDIA trades at a trailing P/E of 40 with 85% revenue growth, which is different from Cisco's valuation in the 130x to 200x range with revenue growth in the 40s to 50s.

Payne argues that investors should check whether earnings per share are following the stock price higher and organic versus acquisition-driven growth. He also points out that NVIDIA has beaten EPS estimates in every single quarter from FY2023 Q1 through FY2026 Q2, and the surprise magnitudes have compressed as analysts finally catch up to the run rate.