Sridhar Vembu has now said something that will make many AI-stock fans uncomfortable . Founder and chief scientist of Zoho Corporation is basically warning that current excitement around artificial intelligence (AI) may be pushing big tech valuations into bubble zone.
And honestly,this is not random small comment also. In recent post on X,Vembu looked at price-to-sales ratios of major tech firms and suggested that signs are looking scary,maybe even bigger than dot-com bubble of late 1990s .
He pointed toward companies like Nvidia,Apple,Alphabet,Microsoft,and Meta Platforms . According to him,Nvidia is trading at approximately 20 times its sales,while Apple,Alphabet,and Microsoft are hovering around 10 to 11 times . Meta is at about 7.5 times sales,and Micron Technology is near 19 times.
But problem he is raising is simple only. If company price goes too far away from underlying business fundamentals,then investors may be paying for future dreams more than current reality . And when market mood changes,that can hurt badly.
Few things standing out from Vembu's warning:
- Price-to-sales ratios of Nvidia,Apple,Alphabet,Microsoft,Meta Platforms,and Micron Technology are looking very stretched.
- Vembu compared current AI-driven excitement with late 1990s dot-com bubble and even suggested it may go beyond 1999 type situation .
- His message is basically investor caution,not blind panic,but definitely not ignore-and-move-on also.
And tbh,the Scott McNealy reference makes this whole thing hit harder . Scott McNealy,former CEO of Sun Microsystems,had said after dot-com bubble collapse that paying ten times annual revenue needs almost impossible future performance to make sense.
Vembu quoted that logic directly: "At 10x revenues,to give you a ten-year payback,I have to pay you 100% of revenues for 10 straight years." That line is brutal because it strips away hype and asks very plain question: how much perfect future are investors already pricing in?
He also described current setup as "an insane bubble," and coming from someone like Sridhar Vembu,it will definitely make people pause . AI stocks,especially in semiconductor and software sectors,have been running hard because market expects AI technologies to bring huge growth and productivity gains across industries.
And yes,maybe AI really changes everything . But at same time,valuation still matters ah. When Nvidia is around 20 times sales and Micron Technology near 19 times,people are not just buying business,they are buying belief.
So now question is whether this AI rally is genuine beginning of new tech cycle or same old market excitement wearing new clothes… and nobody will know until money starts moving other way.
