Nasdaq 100 has rallied over 30% this year as artificial intelligence continues to attract investors into the big cap tech stocks.
Professor Siegel’s view on AI stocks
More importantly, the AI-driven rally is not over just yet, as per Jeremy Siegel – Professor of Finance at the Wharton School of the University of Pennsylvania. On CNBC’s “Street Sigs Asia”, he said:
It’s not a bubble yet. First, there was excitement about artificial intelligence and Nvidia Corporation ratified that excitement with blowout earnings. That’s a double push.
The semiconductor behemoth recently cited the AI boom and issued revenue guidance for its current quarter that topped Street estimates by a whopping $4.0 billion (read more).
At writing, Nvidia stock is up nearly 75% versus the start of the year.
Are AI stocks overvalued?
Professor Siegel agreed that valuations for the AI stocks at the moment may be inflated a little bit but he did not dub it a concern at least in the near term.
For the short term, we know momentum can carry stocks far higher than their fundamental value and no one can predict how high they might go.
Another positive he noted was that the credit conditions were not really a threat for the big cap tech stocks. They may also be uplifted by inflation that continues to ease month after month.
Siegel’s view is in stark contrast with economist David Rosenberg who last week said the AI mania could crumble as the internet bubble did in early 2000s.
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