Nvidia, Micron and Broadcom Already Trade Like Cisco Post Dot-Com Burst: Bank of America
Key takeaways
- AI‑chip valuations are already reflecting a post‑crash cycle, with the sector entering a second bear market this year as inflation and rate concerns weigh on demand.
- SOX down 9% this week
- SOX 22% below June 22 record
- Micron fell 13.1% to $894
What happened
Chip stocks slid sharply this week, with the Philadelphia Semiconductor Index falling about 9% and on track for an eighth straight daily decline. Nvidia, Broadcom and Micron traded at roughly 13‑times forward earnings, a level comparable to Cisco’s post‑dot‑com crash multiples. The decline was driven first by memory‑chip sell‑offs—Micron dropped 13.1% to $894 after a record $1,088 on Oct. 7—followed by a hotter‑than‑expected inflation reading that revived fears of further Fed rate hikes.
Why it matters
The valuation comparison suggests the AI‑chip bubble may already be deflating, as these stocks are now priced at multiples that historically signaled a post‑crash cycle. A 20% drop from a peak is the standard definition of a bear market, and the SOX is 22% below its June 22 record, marking a second bear market this…
Short-term and longer-term
Short-term. Over the next few days, watch for any further weekly declines in the SOX and individual memory names.
Longer-term. Over the coming months, the chip sector’s valuation compression may force a rebalancing toward more mature, cash‑generating names.