After 25 years, the "Nvidia" of the last era has finally risen again

Cisco's stock price reached an all-time high on Wednesday, finally surpassing the peak set during the internet bubble period. This once-symbolic benchmark company of the internet technology revolution took over 25 years to return to its peak, and its recovery journey reflects the long process of restoring investor confidence after the bubble burst.

Cisco's stock price rose 0.9% on Wednesday to $80.25, breaking the record high set on March 27, 2000. That day is viewed by many as the peak of the internet bubble and marked the highest point of the tech-heavy Nasdaq 100 index before the end of 2015.

This round of gains was driven by a general market rebound following the Federal Reserve's third consecutive rate cut. The S&P 500 index rose 0.7% that day, while the Nasdaq 100 index increased by 0.4%. Behind Cisco's stock price recovery are its strong revenue expectations and the market's optimistic outlook on AI spending accelerating the company's growth.

Dec Mullarkey, Managing Director at SLC Management, stated that Cisco's return is a "sign of confidence," but it also "reminds people that recovering from a bubble can take a long time." He compared this to the Japanese stock market, which also took decades to recover from the bubble of the late 1980s. "Once investor confidence is lost through painful sell-offs, it may take years for investors to regain acceptance."

The Rise and Fall of the Former "Four Horsemen of Nasdaq"

As Cisco returns to its historical high, investors and market observers are comparing today's rally led by the "Seven Giants" to the internet bubble period. In the late 1990s, Cisco was one of the "Four Horsemen of Nasdaq," attracting significant investor attention alongside Microsoft, Intel, and Dell.

In the two years leading up to its record in 2000, Cisco's stock price soared nearly 600%, pushing the company's market value above $500 billion. When the internet bubble finally burst, Cisco lost about 90% of its market value, bottoming out at around $60 billion by the end of 2002.

Since then, Cisco's stock price has risen over 800%. However, its market value is still more than 40% lower than the peak level during the internet bubble. Mullarkey pointed out that Cisco has become more of a utility company rather than an innovator, which is likely what investors want to see.

Demand for AI Infrastructure Drives Recovery

Cisco's latest round of gains stems from a strong revenue forecast released last month. The San Jose, California-based company stated that it expects sales for the fiscal year ending in July to reach as high as $61 billion, exceeding Wall Street expectations and about $1 billion higher than previous forecasts.

Cisco has been working to reposition itself to benefit from the billions of dollars that global enterprises are investing in AI infrastructure. The demand for AI infrastructure products prompted UBS analyst David Vogt to upgrade Cisco to a buy rating ahead of its first-quarter earnings announcement last month However, many on Wall Street remain skeptical about whether the AI spending boom can sustain such a rapid pace, and even question whether the accounting treatment related to it is appropriate