Apollo just doubled down on their view that we are in a bigger bubble than the 2000 Dot-com bubble.
3 weeks ago, they said the current bubble is "bigger than the 1990s tech bubble." They note that the Forward P/E ratio for the top 10 tech stocks right now is ~40x. Compared to 2000, at the peak of the Dot-com bubble, the Forward P/E on the top 10 tech stocks was ~26x. Now, Apollo says that ~30% of stocks have a P/E ratio of 30x or more. Overall, Apollo says that P/E ratios now are much higher than they were in 2000. What's next for AI hype? Source: The Kobeissi Letter
Stock Bubble mentions in the media are at 2-year highs but still well short of the meme-stock mania period in early 2021
source : bloomberg, barchart
Bubbles out into perspectives...
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Bubbles out into perspectives...
Source: Refinitiv
Are Mag7 stocks in a bubble?
No doubt, in some ways they are really pricey BUT as shown by this work from Sonus Varghese on this important question, fundamentals justify to some extent their dominance. Since 2021, NVDA stock is up 130%, yet earnings are up 231%. And other Mag 7 names are similar... Source: Carson, Ryan Detrick
Is this time different?
Source: Markets & Mayhem, BofA
A history of bubbles from BofA shows we may still be in the very early stages of an AI bubble.
Source: BofA, TME
Lots of talk about a bubble in AI/Mag 7...
At this point, valuations at the top are no where near as frothy as they were at the height of the Dot Com Bubble. The 5 largest stocks traded at 43x Fwd PE in March ‘00, a 59% premium to the Mag 7’s current multiple of 27x. Source: David Marlin, Goldman Sachs
