Xin Lang Cai Jing·2025-08-22 09:43Core Viewpoint - The current performance of the Nasdaq index is remarkably similar to the internet bubble after 1995, with parallels in fundamental factors such as significant interest rate hikes by the Federal Reserve in both 1994 and 2022, and the disruptive nature of technologies like the internet in the 1990s and artificial intelligence today [1][3]. Group 1: Historical Comparison - DataTrek analysis suggests that the technology giants of 2025 will be superior to those of 1999, justifying their higher valuations [3]. - The five major tech companies in 1999 included Intel, Cisco, IBM, Oracle, and Microsoft, which had significant revenues and profit margins at that time [4]. - Adjusted for inflation, the revenues and net income of the 1999 giants would be $57,124 million and $14,216 million respectively in 2025 dollars [4][6]. Group 2: Current Giants - The current five tech giants in 2025 are Nvidia, Microsoft, Apple, Meta, and Alphabet, showing higher revenues and profit margins compared to their 1999 counterparts [5]. - The average revenue for the 2025 giants is projected to be 4.6 times higher than that of the 1999 giants, with net income being 9.1 times higher [6]. - The average net profit margin for the 2025 giants is 34.2%, significantly higher than the 20.9% of the 1999 giants [6]. Group 3: Individual Company Analysis - Nvidia's 2025 revenues are projected at $44,062 million, with a net income of $18,775 million, showcasing a net margin of 42.6% [7]. - In comparison, Intel's 1999 revenues were $29,389 million, with a net income of $7,314 million and a net margin of 24.9% [7]. - Nvidia's return on equity (ROE) is projected at 89.6%, vastly outperforming Intel's 22.5% from 1999 [7]. Group 4: Investment Implications - Investors are willing to pay a premium for companies with superior capital returns, suggesting that higher profitability could lead to elevated valuation levels [8]. - Historical peaks in the S&P 500's forward P/E ratio exceeded 23 times during the internet bubble, indicating potential for further increases in valuations if tech companies continue to advance rapidly [8]. - The belief is that future tech giants in 2045 will likely surpass today's leading companies, reinforcing the rationale for long-term stock holdings despite current high valuations [8].