"“I think there's just an amazing level of confidence that the winners of AI today will be the winners tomorrow,” he said. The math behind that confidence should make you pause. Conger's framing: “The idea that companies actually can't grow 10 years in a row at 100%, which is what's required if you're paying, you know, 150 times sales for something.” Stretch a price-to-sales multiple that high and you're underwriting a decade of doubling revenue every year. No public company has ever done that."
"Conger's cautionary tales are Cisco and Juniper Networks. Both built the real plumbing of the internet. Both saw growth decelerate over many years, eventually settling into a low-double-digit range. The companies were right about the technology. The stocks still spent years working off the valuations. Owners who bought at the peak waited a very long time to break even, and some never did at the original ticker."
"Here is where Conger separates himself from the permabears. He calls AI “a real innovation” with “more applicability to the world” than crypto, NFTs, or the cannabis frenzy from eight years ago. AI, he says, will be “with us for a long time.” Jack Hough said: “Better than the apes in cannabis, but you gotta be careful about the prices.” You can listen to the full episode on Barron's."
"The market is already pricing in some of this caution. A TradingKey analysis this weekend noted that memory names like SanDisk and Micron have rallied even as forward multiples compress, and chipmakers sold off sharply despite Q2 FY2026 revenue of $10.6 billion and EPS of $2.65. Insider selling at major tech names tells you executives see the same prices we do."
High confidence in AI winners is often based on the assumption that today’s leaders will keep winning tomorrow. That confidence can be undermined by valuation math: paying very high price-to-sales multiples implies revenue must double repeatedly for a decade. No public company has historically sustained that kind of growth for that long. Cisco and Juniper built core internet infrastructure and remained technologically correct, but growth decelerated over many years into low-double-digit ranges. Their stocks then spent years absorbing the original valuations, and some investors waited a long time to break even. AI is treated as a durable innovation with broad applicability, but prices still require caution as the market already reflects some of that risk.
Read at 24/7 Wall St.
Unable to calculate read time
Collection
[
|
...
]