When I look at Nvidia (NASDAQ: NVDA) stock price, the numbers alone don’t seem to be enough. The market capitalization is currently around $3 trillion. However, since its peak a month ago, the company’s value has fallen by around $460 billion.

For comparison, this is almost twice the market capitalization AstraZenecathe largest listed company in the UK. And that’s just the size of the price drop.

As “AstraZeneca” becomes a useful unit of measurement for gauging stock price swings, I have to wonder whether the stock market has actually gone mad.

Bullish view

Of course, it’s about the expected demand for artificial intelligence (AI). Nvidia makes the chips that power the AI ​​revolution, and that should mean a substantial slice of a very substantial pie. But how substantial can that pie be?

If we listen to the bulls, the global AI market value should grow by 35% in 2024, reaching $184 billion. And by 2030, it could reach $827 billion, about six times more than in 2023.

Putting a current value on what this could mean for Nvidia is arduous. But right now, we’re looking at a price-to-sales ratio (PSR) of 40. Apple‘s is 9.6, while Microsoftrose to 14. The Nasdaq average is about 5.3.

Even with a six-fold raise in revenue, Nvidia PSR would still be above average for the tech stock index. But if the case for AI growth holds true, it could be a good value.

What Bears Think

Not everyone is so hopeful, however. A recent report from Goldman Sachs suggests that AI may not be as groundbreaking as the headlines suggest. And that substantial investments in AI stocks at today’s prices could disappoint.

Economist Daron Acemoglu told Goldman Sachs that he thinks AI will add only about 1% to the U.S. economy over the next 10 years. Goldman Sachs itself suggests a 6% raise in GDP.

People are talking about companies investing $1 trillion in AI development over the next few years. Even the most hopeful estimates suggest that it might take some time to recoup that in profits.

Do you know what all this reminds me of? Yes, the dot-com revolution and the dot-com bubble it created. I lived and invested through it.

Bubble?

Everyone said the Internet would revolutionize the way we do everything, create huge savings, and generate huge revenues.

They were right. But that didn’t stop high-flying stocks from crashing painfully as the early bubble burst.

Some have actually rewarded their shareholders multiple times over. And while I avoided pain by never putting a penny into tech stocks, I missed out on substantial winners like Amazon.com.

So is Nvidia going to be the next Amazon? I don’t know. But I do know that even Amazon fell pretty strenuous from its early peaks before it really got on a growth trajectory.