Fears of a tech bubble have it backward. Stocks can keep going.
Oracle, a rise of close to 40% in a day last week, confused the memories of this foamy period-and was worried about over-AI optimism. However, there is a big difference between the 1999 stock exchange party: companies are now making real money.
Solus alternative asset management strategist from Greenhaus said, “Price performance was crazy,” he said. “Stocks were divided several times a year because the appreciation was very large.”
“Whether they have any sales or not, everything was going to the public. There was an enthusiasm between markets and sectors that didn’t feel similar to today.”
Greenhaus, today’s major technology companies are expensive, but not close to “Dot-Com the bubble values”. The bull market may take longer.
Famously, Alan Greenspan, former Federal Reserve President, used the term “irrational enthusiasm için to describe high asset prices in December 1996 years before the summit of the market.
Technology stocks due to artificial intelligence benefit from the real effects on their earnings. “It continues in general, but it doesn’t become more expensive, Gree Greenhaus said. He said that the rise of the stock was directed not only by values, but by “excessive gains and sales revisions”.
Oracle’s great stock move came after the company reported a much stronger AI income estimation than the market expected. Now he sees that cloud infrastructure revenue has reached $ 18 billion in this financial year in the next four years.
Rick Rimer, the chief investment manager of the global fixed income in Blackrock, said today, companies using the market will have a lot of cash flow.
Rieder said, “They can still spend for capital expenditure, research and development, and they still have a lot of money to get back their stocks. This technology has been the opposite of the balloon.”
Rieder said that his adoption was “an extraordinary expenditure that changes the economic landscape with the power to provide great gains in productivity.
The width of artificial intelligence trade is much larger than the Internet and Y2K -ork -ork focused trade in the late 1990s and early 2000s. Internet -related games are the stocks that are accepted as the “old economy olan which is traded with low values while managing high premiums.
The market treats AI innovation differently. Evercore Heat describes its impact on stocks as “participatory democracy ,, which is the potential to benefit companies that create, support and use it. AI can create winners among industries far beyond technology. The company says that one -quarter of the companies adopted AI just three years after Chatgpt was announced to the public.
According to EverCore Heat, more stock than rising every day in the last two years of the technology balloon was falling and pointed to a serious deterioration in the health of the market. The opposite of what is now, more stocks are moving, the indices are higher.
The wider snow picture is also different.
“Intel, Sun Micro, Cisco, Microsoft, the great men were profitable at that time. It was the great satellite of non -profitable peripheral companies.
Amazon, one of the heavy weights in Magnificent 7, was not profitable during the technology balloon. The first three -month wife was in 2021.
“The best money was not earned for the companies that build the Internet. He said.
Charles Schwab’s chief investment strategist Liz Ann Sonders said he saw some symptoms of foam on the market. However, he believes that the bull market will continue.
“When the emotion reaches the foam end of the spectrum, this feeling can last for a long time,” he said.
The magnificent 7 stocks fueled most of the S&P 500 earnings, while technology giants, including Alphabet, Microsoft, Amazon and Meta, are not the biggest gains in the stock market this year.
According to Schwab, meta is the best performance in S&P 500, but the best 57th in S&P was 58th for Schwab.
Sonders said he currently does not recommend certain sectors or even high quality stocks.
“The quality of the opportunity reduces the quality spectrum to a slightly more valuable directed areas, but you do not want to sacrifice good growth opportunities.” Positive earnings revisions, positive earnings surprises, low price, low price sales and free cash flow amount looking for factors.
Some strategists expect a correction to reduce some enthusiasm of the market. Sonders said it was a correction that rolled on the market.
He said that the S&P 500 fell 19% at its low point this year, and the average disadvantage at the average member level was 25% of the highest annual levels. S&P healed rapidly and continued to establish new heights.
Sonders said Nasdaq’s biggest winners are currently containing small, less known stocks. “Retail traders have fingerprints all over this market. There is a complete vapor in front of us – and they buy immersion, they buy every small immersion. And so you can discuss at some point, the music ends. But it may take a while.”
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