Despite the impressive returns this year and the constant hype around AI and technology, Vincent Mortier believes investors are getting irrationally excited.
One of Europe's top investment managers is sounding the alarm as tech stocks continue their meteoric rise and optimism spreads across global stock markets. Vincent Mortier, chief investment officer at Amundi SA, believes valuations for U.S. tech companies are dangerously overheated, echoing concerns about a possible repeat of the dot-com bust. .
Mortier warns that despite this year's impressive gains for the FAANG and semiconductor giants, irrational exuberance, overconfidence in AI and disinflation are distorting asset prices.
Europe's biggest fund manager says US tech stocks are overvalued
U.S. tech stocks are currently expensive, said Vincent Mortier, chief investment officer at Amundi SA, Europe's largest fund manager. Mortier cites overconfidence in disinflation and misplaced optimism about technology stocks as reasons for the inflated investor payouts.
Amundi SA, which has $2.1 trillion in assets, is avoiding the rally in big tech stocks despite the potential for short-term gains. Mortier believes it is important to maintain current investment positions for long-term returns, and does not believe his share price growth will continue over the long term.
The S&P 500 and European benchmark indexes have posted strong gains on interest rate cuts and hopes for artificial intelligence, with major tech stocks benefiting the most. But Mortier cited the market's overvaluation and volatility, drawing parallels to the dot-com bubble and concerns from the 2007 financial crisis.
Magnificent Seven performance in 2024
The S&P 500 (SPX) has gained 4.22% since the beginning of the year, serving as a reasonable benchmark for the overall market. Among the tech giants, Apple (NASDAQ: NASDAQ:) and Google parent Alphabet (NASDAQ:) Inc (NASDAQ: GOOG) posted modest gains of 1.10% and 3.85%, respectively. In contrast, Microsoft (NASDAQ: NASDAQ:) (9.38%), Amazon (NASDAQ: NASDAQ:) (13.38%), and Meta (NASDAQ: NASDAQ:) (an astounding 34.63%) outperformed the index and attracted investors. It reflects enthusiasm. their growth prospects. However, not all tech stocks share this optimistic view.
Once a market darling, Tesla (NASDAQ: NASDAQ:) experienced a hefty 28.39% decline, likely due to concerns about the competitive environment. Meanwhile, Nvidia (NASDAQ: NASDAQ:) has been a standout performer, surging a hefty 44.62% on the back of strong demand for chips, particularly in the artificial intelligence and gaming space.
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Disclaimer:
The author does not own or hold any securities discussed in the article. Neither author Tim Freese nor this website, The Tokenist, provides financial advice. Please review our website policies before making any financial decisions.
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