"Those betting on the tech are wagering it will supercharge productivity and mint profits for the businesses harnessing it, fueling a growing debate about whether surging AI stocks warrant their sky-high valuations or are destined to crash. Dietrich, Wedbush's chief investment strategist, told Business Insider that the bull run reminded him of the hype and speculation during the dot-com bubble in the late 1990s and the housing bubble in the mid-2000s."
"Nvidia shares have soared about 13-fold since the start of 2023, catapulting the chipmaker to a $4.5 trillion market capitalization. That figure exceeds the combined value of Berkshire Hathaway, JPMorgan, Walmart, Eli Lilly, and Visa. Dietrich, who manages money for private investors, institutions, and retirement funds, said he believed AI would "change everything" but added that valuations were "out of whack.""
The AI-driven rally in technology stocks shows bubble-like characteristics reminiscent of past dot-com and housing bubbles. Semiconductor shares have surged dramatically, with a leading chipmaker rising roughly 13-fold since early 2023 and reaching about a $4.5 trillion market capitalization that exceeds several large corporations combined. Valuations across the AI sector appear disconnected from fundamentals despite expectations that AI will transform productivity. Retail investors are increasingly using borrowed funds to amplify positions, raising systemic risk. Blue-chip enterprise software stocks have experienced steep declines in prior market crashes. Defensive allocations such as utilities and gold offer shelter during potential market turmoil.
Read at Business Insider
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