The CBOE ground in 1999 seemed precisely like what we’re seeing proper now.
I traded choices on that ground from 1999 to 2000, experiencing the dot-com bubble in actual time. I watched inventory after inventory IPO at a value, double on the open, and crater inside months.
Final week, Cerebras Programs (CBRS) gave me a *shivers* flashback.
Right here’s a fast abstract…
The inventory was initially priced at $185 on Could 13 (already above its $150-$160 vary). CBRS opened Thursday, Could 14, at $350.
It practically doubled instantly.
Then it surged to $385 earlier than a buying and selling halt. By the point the closing bell rang, shares settled at $311. A 68% first-day achieve.
Did purchaser’s regret set in for individuals who purchased on the prime?
You inform me…
By Friday’s shut, CBRS was at $279.72, down 10%.
On the peak of their pricing, Cerebras was valued at roughly 130x trailing income.
For context, Nvidia (NVDA) – which generated income of $62.3 billion, up 22% from Q3 and up 75% from a yr in the past – trades at roughly one-fifth that a number of.
After simply at some point of buying and selling, Cerebras now carries a market cap of $100 billion, making it as worthwhile as ServiceNow (NOW) and Adobe (ADBE), regardless of gross sales of simply $510 million in 2025.
A Warning Flag
With regards to AI names, have we gotten into dot-com territory?
Are consumers merely infatuated with the concept Cerebras has developed a processing chip the scale of a dinner plate?
In spite of everything, Cerebras isn’t simply constructing one other GPU (graphics processing unit). They’re constructing one thing basically totally different.
The corporate’s flagship Wafer-Scale Engine 3 is, in line with Cerebras, the biggest commercialized AI processor on the planet. It’s 58 instances bigger than a number one GPU chip.
That’s some spectacular engineering… however it does NOT justify a 130x income a number of after at some point of buying and selling.
Wall Avenue will type this out. However from what I’ve seen previously, it gained’t go properly for individuals who purchased on the prime.
YOUR ACTION PLAN
There’s better worth proper now in steady, constant firms buying and selling at way more enticing valuations. Names you may maintain for the dividend AND commerce the pops on.
Two names I’ve highlighted inside The Conflict Room…
Dwelling Depot (HD): Down 20% this yr and carrying a 3% dividend, HD is buying and selling for 20x 2026 earnings. Any pickup within the housing sector may set off a pop.
McDonald’s (MCD): Down 10% yr so far on worries that greater gasoline costs may hit gross sales, MCD is buying and selling for 20x earnings with a 3% dividend yield. If shoppers cut back on luxurious meals and pivot to McDonald’s, that is the discount that pays you to attend.