- Sridhar Vembu warned of a tech market bubble bigger than the dot-com era driven by AI hype
- He highlighted high price-to-sales ratios for Nvidia, Apple, Alphabet, Microsoft, Meta, and Micron
- Vembu cited Scott McNealy's 2002 comment on unsustainable 10x revenue valuations as a warning
Zoho Corporation founder and chief scientist Sridhar Vembu has warned that the sharp rise in valuations of leading technology companies, driven largely by enthusiasm around artificial intelligence, bears the hallmarks of a market bubble that could surpass the dot-com era.
In a post on X, Vembu pointed to the price-to-sales ratios of some of the world's largest technology companies, including Nvidia, Apple, Alphabet, Microsoft, Meta and Micron, arguing that current valuations appear disconnected from underlying business fundamentals.
“Price to Sales ratio for big tech (not price to earnings): 1. Nvidia: 20x, 2. Apple: 10x, 3. Alphabet (Google): 11x, 4. Microsoft: 10x, 5. Meta: 7.5x, 6. Micron: 19x,” Vembu wrote on X.
Price to Sales ratio for big tech (not price to earnings):
— Sridhar Vembu (@svembu) May 30, 2026
1. Nvidia: 20x
2. Apple: 10x
3. Alphabet (Google): 11x
4. Microsoft: 10x
5. Meta: 7.5x
6. Micron: 19x
As Scott McNealy of Sun Micro said back on 2002: "At 10x revenues, to give you a ten-year payback, I have to pay…
The entrepreneur also referenced comments made by former Sun Microsystems CEO Scott McNealy following the collapse of the dot-com bubble.
“As Scott McNealy of Sun Micro said back in 2002: ‘At 10x revenues, to give you a ten-year payback, I have to pay you 100% of revenues for 10 straight years...',” Vembu said.
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Drawing a comparison with the late-1990s technology boom, he added: “This is an insane bubble, even bigger than 1999.”
Vembu's remarks come amid a sustained rally in AI-linked technology stocks, particularly semiconductor and software companies, as investors continue to bet on rapid adoption of artificial intelligence technologies across industries.
Several X users disagreed with Vembu's comparison to the dot-com bubble, arguing that today's tech giants are highly profitable, unlike many internet companies in 1999.
One user wrote, "Price to Sales ratio works for manufacturing companies that offer products with little differentiation, and their profit margins are low. However, it does not work for cos such as Nvidia that are converting more than half of their sales into net income."
Kislay Parashar of Cosmic Labs echoed the view, saying, "The thing people always leave out is that 1999 companies were burning cash. These companies are printing cash. Whether valuations are stretched is a different argument entirely."
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