Some in the media say large technology stocks are in a bubble, citing Nvidia as Exhibit A. Nvidia’s 130-percent rally this year gives credence to their case. Others remain bullish with a view that these stocks will be the beneficiaries of the Artificial Intelligence revolution.

Back in the year 2000 there was a similar debate about the dot-com stocks. The stocks of companies that had a website and utilized the internet soared. Until they didn’t. Starting in March 2000 the S&P 500 lost 50 percent and the Nasdaq Composite plunged 75 percent. Are today’s large-cap technology stocks, and especially Nvidia, in another bubble?

Jeffrey Gundlach, DoubleLine Capital’s CEO, thinks so. He sees the similarities to the dot-com bubble. I see the parallels too, but only in the lesser-known stocks. Investors moonstruck by the possibilities of AI have pushed some smaller firms to similar silliness. But those stocks are very different than Nvidia, Microsoft, and Alphabet.

These major AI companies are not like the dot-com stocks in 2000. Most on main street haven’t even heard of Nvidia even though it is the third largest U.S. company with a market cap greater than two trillion dollars. It and others have real businesses and life-changing products to help companies boost margins and profits.

Nvidia is far ahead of its chip competitors. It beat earnings estimates by a whopping 30 percent last summer and its P-E ratio, while still high, has fallen even as the stock rose because its earnings have been so strong. Its next chip, the Blackwell B200, will ship later this year and will be four times faster and use less energy than their existing chip.

Eventually competitors will catch up. They always do. But not yet. One can debate whether Nvidia and other AI stocks are grossly overvalued. Over time we’ll know the answer. But a bubble? No. The full impact of AI on corporate profits will take years to unfold and it will be a catalyst to push prices higher.

The proof that there isn’t a bubble in AI or the wider market is the $6 trillion in money-market funds. Those investors don’t believe in the bull market and are happy to get a 5 percent risk-free return. Eventually that money will go to stocks and bonds, especially after the Fed cuts rates. Money market fund withdrawals will push stocks and bonds higher. We are seeing that happening now.

David Vomund is an Incline Village-based Independent Investment Advisor. Information is found at www.VomundInvestments.com or by calling 775-832-8555. Clients hold the positions mentioned in this article. Past performance does not guarantee future results. Consult your financial advisor before purchasing any security.