'This is an insane bubble': Zoho's Sridhar Vembu sounds alarm on AI-driven tech valuations
Sridhar Vembu cited price-to-sales ratios for major tech firms, including Nvidia at 20x, Apple at 10x, Alphabet at 11x, Microsoft at 10x, Meta at 7.5x, and Micron at 19x.
- May 31, 2026,
- Updated May 31, 2026 7:35 AM IST
Zoho founder Sridhar Vembu has renewed his warning that artificial intelligence is fueling a massive market bubble. He has pointed to the lofty valuations of some of the world's largest technology companies, such as Nvidia and Apple.
In a post on X, Vembu cited price-to-sales ratios for major tech firms, including Nvidia at 20x, Apple at 10x, Alphabet at 11x, Microsoft at 10x, Meta at 7.5x, and Micron at 19x.
Drawing on a remark by former Sun Microsystems chief Scott McNealy during the aftermath of the dot-com boom, Vembu wrote: "At 10x revenues, to give you a ten-year payback, I have to pay you 100% of revenues for 10 straight years..."
Vembu then added: "This is an insane bubble, even bigger than 1999."
His comments triggered a debate online, with several users arguing that comparisons with the dot-com era overlook a key difference: today's technology giants are generating substantial profits.
One user said, "Price to Sales ratio works for manufacturing companies that offer products with little differentiation, and their profit margins are low. However, it does not work for cos such as Nvidia that are converting more than half of their sales into net income."
Kislay Parashar of Cosmic Labs made a similar point, writing: "The thing people always leave out is that 1999 companies were burning cash. These companies are printing cash. Whether valuations are stretched is a different argument entirely."
Another user, Naren, argued that price-to-sales ratios alone provide an incomplete picture. "P/S without margins is a vanity metric. McNealy’s 10x line was about a ~10% margin on a hardware box. Nvidia does 20x on a 63% net margin and a 32 P/E, that’s not 1999, where the comps had high P/S and zero earnings. And Micron at '19x'? Revenue tripled YoY. Forward P/S is ~7. You’re pricing it off stale trailing sales on a cyclical."
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Zoho founder Sridhar Vembu has renewed his warning that artificial intelligence is fueling a massive market bubble. He has pointed to the lofty valuations of some of the world's largest technology companies, such as Nvidia and Apple.
In a post on X, Vembu cited price-to-sales ratios for major tech firms, including Nvidia at 20x, Apple at 10x, Alphabet at 11x, Microsoft at 10x, Meta at 7.5x, and Micron at 19x.
Drawing on a remark by former Sun Microsystems chief Scott McNealy during the aftermath of the dot-com boom, Vembu wrote: "At 10x revenues, to give you a ten-year payback, I have to pay you 100% of revenues for 10 straight years..."
Vembu then added: "This is an insane bubble, even bigger than 1999."
His comments triggered a debate online, with several users arguing that comparisons with the dot-com era overlook a key difference: today's technology giants are generating substantial profits.
One user said, "Price to Sales ratio works for manufacturing companies that offer products with little differentiation, and their profit margins are low. However, it does not work for cos such as Nvidia that are converting more than half of their sales into net income."
Kislay Parashar of Cosmic Labs made a similar point, writing: "The thing people always leave out is that 1999 companies were burning cash. These companies are printing cash. Whether valuations are stretched is a different argument entirely."
Another user, Naren, argued that price-to-sales ratios alone provide an incomplete picture. "P/S without margins is a vanity metric. McNealy’s 10x line was about a ~10% margin on a hardware box. Nvidia does 20x on a 63% net margin and a 32 P/E, that’s not 1999, where the comps had high P/S and zero earnings. And Micron at '19x'? Revenue tripled YoY. Forward P/S is ~7. You’re pricing it off stale trailing sales on a cyclical."
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