Welcome to Episode #486 of the Zacks Market Edge Podcast.
Every week, host and Zacks stock strategist, Tracey Ryniec, will be joined by guests to discuss the hottest investing topics in stocks, bonds, and ETFs and how it impacts your life.
This week, Tracey was joined by Zacks Senior Editor, Mark Vickery, to talk about their experiences being 20-somethings during the dot-com boom in the late 1990s. They were in the beginning of their careers. Tracey was working as a lawyer in San Francisco, the epicenter of the boom. Mark was working in sales at Zacks in Chicago.
Online investing had only just begun on platforms like eTrade. Companies were creating websites. Amazon launched and everyone was buying books without going into a store.
Stock speculation quickly rose. Some quit their jobs to daytrade. When dot-com companies went public, employees with stock options were getting rich.
What lessons do Tracey and Mark have for today’s investors in the AI Revolution?
Lessons Learned in the Dot-Com Boom
Fear of Missing Out, or “FOMO”, will be strong at peak bubble. Are you feeling pressured to get in? Don’t quit your job to daytrade. Are your parents or grandparents asking you for AI stock tips? That’s a sure sign of a bubble. Does it seem like everyone is getting rich and that it’s “easy”?Hot Stocks Then and Hot Stocks Now
1. Microsoft Corp. (MSFT)
Microsoft was one of the must-own stocks of the 1990s and the dot-com boom. The stock had gained so much that it created hundreds of “Microsoft millionaires” at its headquarters in Redmond, WA.
Microsoft shares peaked in 2000, along with the other top technology names. It would not regain its highs until 2013. Yet, here Microsoft is again, during another technology revolution.
Shares of Microsoft are down 13.3% year-to-date even though earnings are expected to jump 27.1% this year. This is after growing earnings 15.6% last year.
Because of the weakness in the shares, Microsoft’s valuations have gotten more attractive. In 2000, it traded with a price-to-sales (P/S) ratio above 10, which means it was expensive. Currently, Microsoft is trading with a P/S ratio of 9.8. That is still expensive, but it is not over 10, which is considered to be stretched, even for a growth company.
Is there a bubble in Microsoft in 2026?
2. Alphabet Inc. (GOOGL)
Alphabet has become the darling of the AI Revolution in 2026, with the shares hitting a new all-time high. It now has a market cap of $4.7 trillion.
Alphabet is expected to grow earnings by 32.2% this year after they jumped 34.5% last year. It’s P/S ratio has gotten stretched, however. It’s currently 11.2. A P/S ratio over 10 usually indicates the company is expensive.
Berkshire Hathaway has taken a big stake in Alphabet in 2026 as Alphabet’s AI investments appear to be paying off.
Is there a bubble in Alphabet in 2026?
3. NVIDIA Corp. (NVDA)
NVIDIA is one of the top stocks of the AI Revolution. It’s the leader of the entire boom with a market cap of $5.4 billion.
Shares of NVIDIA are up 17.7% year-to-date. It recently hit another new all-time high.
If you look at NVIDIA on a price-to-earnings (P/E) or PEG ratio basis, it looks attractively priced. It has a forward P/E of 27, which isn’t that stretched. Earnings are expected to soar 71.1% this year after jumping 59.5% last year.
NVIDIA has a PEG ratio of just 0.7. A PEG under 1.0 usually indicates a company has both growth and value.
But it’s P/S ratio tells a different story. It’s at 21.4, which indicates investors are paying a high price for the sales.
Is there a bubble in NVIDIA in 2026?
What Else Should You Know About Bubbles and Manias Past and Present?
Tune into this week’s podcast with Tracey and Mark to find out more.
[In full disclosure, Mark owns shares of NVDA in his personal portfolio and Tracey owns GOOGL and MSFT in hers.]
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Microsoft Corporation (MSFT): Free Stock Analysis Report
NVIDIA Corporation (NVDA): Free Stock Analysis Report
Alphabet Inc. (GOOGL): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).