By Monish Chhabra ǀ May 30, 2023

The recent tech bubble, 8 years running now, has two major poster boys – one is the global leader in GPU chips, and the other is the largest systems software provider.

Every technological narrative since 2015 has worked for these two giants, even while many of their tech peers lost their plot along the way.

Most of these narratives are compelling. That is how all big bubbles are built – easy to understand, easy to extrapolate.

Yet, the stock price can go to wrong places, for all the right reasons. 

Both these companies’ stock prices are charted below on the same graph, from an equalized base of 100, starting from the previous tech bubble in the year 2000.

The dotted lines in the middle of each graph represent the normalized long-term growth trend. While the dashed lines on the top and bottom of each graph are the best statistical fits for the upper- and lower-bound of their stock prices, respectively. 

By the end of 2021, both these companies had reached a similar high in their stock prices, as in 2000. 

They then corrected over the year 2022 – a period when many lesser mortals in their sector completely fell apart. 

Then came 2023, along with new narratives, and both these stocks rallied back up. 

Now, the stocks of these two companies are back to the scene of crime. 

Around here is where they peaked two decades ago, through repeated attempts to pierce through the top and pull-backs from it. 

Topping out is a process. Often, the strongest players don't burst with a single prick. 

After their respective peaks at the end of 1999 and 2001, the software giant took 15 years, and the semiconductor leader took 14 years to go past those prior peaks again. 

All this while, their business was fulfilling the promise that their stock price had made 15 years before. 

Now those stocks are making a big promise again. 

And in similar fashion as before - through repeated attempts at the top since 2021, and intermittent pull backs. 

Eventually, either the top gets taken out, or the price is humbled. 

The former will be a miraculous escape. The latter – a violent payback.