In the ever-changing technology landscape, NVIDIA has recently grabbed headlines by surpassing Microsoft in terms of market value. However, this is not the first time that Microsoft has been dethroned: at the height of the dot-com bubble, in early 2000, it was Cisco to steal the show.
Taking inspiration from an interesting article by WCCTech, we retrace the history of the networking giant. A story that, who knows, may even teach us something.
Cisco: the networking giant at the center of the Internet revolution
24 years ago Microsoft, the company that had been a pioneer of the personal computer era, found itself giving way to Cisco, a network equipment manufacturer, thanks to Wall Street’s enthusiasm for the growth potential linked to expansion of the Internet. Investors, fascinated by Cisco’s ability to power global connectivity, have pushed the company’s shares higher.
Cisco’s rise was meteoric: During 2000, the company’s shares gained about 30%, while Microsoft faced legal difficulties related to monopoly accusations. On March 25, 2000, Cisco ended the day with a market capitalization of $579.2 billion, surpassing Microsoft by a billion (just for comparison on how much the numbers have changed, NVIDIA surpassed Microsoft by exceeding 3,300 billion dollars, ed.).
Investor optimism was partly justified: in 2000, Cisco reported 55% year-over-year revenue growth. Over the next two decades, the company’s revenues quadrupled, reaching approximately $50 billion. At the height of the dot-com bubble, Cisco was trading at high multiples, with valuations that reflected market euphoria, but were also supported by Cisco’s impressive revenue growth, which rose from $2 billion in 1995 to $19 billion in 2000. .
Despite the bubble bursting and losing much of its market capitalization, Cisco managed to maintain steady revenue growth, rising from $19 billion in 2000 to $22 billion the following year. In 2023, the company’s revenues reached $56 billion, while Microsoft, driven by cloud computing, hit $211 billion.
Cisco’s story reminds us that the stock market can be influenced by emotional factors and sometimes unrealistic expectations. While investor optimism about Cisco was excessive, the company demonstrated remarkable resilience and ability to adapt, continuing to grow and prosper even after the bubble burst.
Who knows if NVIDIA will also find itself facing a similar situation or if it will be able to maintain its lead over Microsoft for longer and manage to remain the most valuable company in the world.
