It’s a big week on Wall Street as five of the Magnificent Seven tech companies will be reporting earnings results: Meta Platforms (META), Microsoft (MSFT), Alphabet (GOOGL, GOOG), Amazon (AMZN), and Apple (AAPL). On top of all this, investors continue to chatter over whether an AI-fueled bubble is forming around markets (^DJI, ^IXIC, ^GSPC) or not.
Goldman Sachs global head of energy strategy Peter Oppenheimer sits down with Market Catalysts host Julie Hyman to explain some of the market conditions that are not indicating a sign of a bubble just yet.
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00:00 Speaker A
Are tech stocks in a bubble? My next guest says, based on the data, nope, not in a bubble, at least not yet. I want to bring in Peter Oppenheimer, Goldman Sachs’ chief global equity strategist who did a deep dive into this in a recent note. Peter, that I found really interesting. You really looked at a lot of different aspects of this question, including looking at other historical comparisons. Um, but short answer, no, we’re not in a bubble. Give us sort of the the summary of why not?
00:39 Peter Oppenheimer
Well, thank you. Um, I I think look, first of all, rising equity prices and you’ve just described very well how most equity markets, not just the US are at all-time highs. That’s certainly a necessary condition for a bubble, but it’s not a sufficient one. You know, alongside rising prices, you need to see intensely increased speculation and rising valuations. Now, it is true that valuations are at pretty high levels, uh particularly in the tech a sector, which is dominating the US market, but really important to emphasize the dominance of technology in the US and of the largest companies has at least until now been fully supported by incredibly strong fundamentals. In other words, it’s really been driven not by speculation about the future, but by consistently strong earnings growth. That’s one thing. I think the second thing is that valuations, while they may be high, are not nearly as high as we’ve typically seen in bubbles before. For example, in the technology bubble of the late 1990s or indeed in Japan in the late 1980s, which was a bubble around real estate and banks. In both cases, valuations were almost double what we’re seeing for the big stocks today.
