Cisco’s 25-year comeback is the ultimate cautionary tale of the AI-bubble debate

Things that have happened since March 2000:

• The US has had five presidents

• The iPhone launched and took over our lives

• Music streaming rendered CD and record collections moot

• Taylor Swift became the most famous entertainer on the planet

• Electric vehicles were invented, then went through an entire boom-and-bust cycle

Things that have not happened since then:

That’s right, the former tech kingpin still has not surpassed its all-time high of $80.06, reached on March 27, 2000. That was during a stretch that saw Cisco very briefly dethrone Microsoft as the world’s most valuable company. The company was the dominant manufacturer of the routers that powered the internet revolution. Life was good.

It was from that level that Cisco’s stock plummeted more than 85% as the dot-com bubble burst. While the company did make it out the other side of the crash, shares were severely wounded, and limped sideways for much of the next decade. Networking hardwareIts hardware became a widely available commodity, erasing its competitive advantage.

Only very recently — on the heels of a 10% surge this past week — have Cisco shares approached the $80 level that still seemed like a distant relic at the beginning of 2025. Only 2.6% left to go!

Still, the company’s $308 billion market cap is “just” 7% of Nvidia’s $4.6 trillion. No matter how you slice it, its days as a world-dominating behemoth are long gone.

Cisco has instead morphed into a dot-com-era poster child, and a cautionary point of comparison for mega-cap tech titans like Apple, Tesla, and Nvidia.

Nvidia, in particular, has drawn its share of skeptics who view it as a possible Cisco 2.0. They point to the similarly rapid stock-price spikes, and the concentration of both businesses in hardware. CEO Jensen Huang has heard these rumblings and has made specific efforts to diversify Nvidia’s business so it doesn’t follow Cisco’s same path of value destruction.

IThe fact that it’s taken Cisco more than 25 years of market underperformance — essentially flat returns over a period that’s seen the S&P 500 soar almost 350% — to recover its dot-com losses. That should be the best possible warning for those fearful of an AI bubble.

If the market does avoid a dot-com-style comeuppance, perhaps companies and investors will look back and say it was their fear of another Cisco situation that saved the day. That would be quite a unique — and ultimately valuable — legacy.

Read the original article on Business Insider