NVIDIA Hits an All-Time High for Third Straight Day: "No 1990s-Style Bubble Collapse"

[Financial News]  

NVIDIA shares continued to rise on the fifth, setting a new all-time high for three consecutive trading days. The record-setting streak that began on the first continued for a third trading day. The tech-heavy NASDAQ Composite also reached a new all-time high for the first time in about two weeks.
With NVIDIA, the flagship stock leading the artificial intelligence (AI) trend, and the NASDAQ Composite continuing their rapid ascent, concerns about a potential bubble collapse have grown. However, one analysis found that a collapse like the dot-com bubble of the late 1990s is unlikely.
Yahoo Finance reported, citing an analysis by Keith Lerner, chief strategist at Truist, that the current technology-stock rally is unlikely to collapse suddenly. Lerner said the expansion in technology-stock valuations has been far more limited than during the internet bubble of the late 1990s, assessing that the risk of a bubble bursting is also very low.  
According to Lerner's analysis, the forward price-to-earnings ratio (forward P/E) for technology stocks had risen by nearly 250% by just before March 2000, when the dot-com bubble collapsed.
The current rise in technology-stock prices, however, is supported by earnings, making valuation pressures much lower than they were at the time. In the current technology-stock bull market, which began in October 2022, the forward P/E has risen by only 14%.
Lerner said, "With technology-stock earnings still solid, valuations have reset to around the level seen when ChatGPT launched," expressing optimism that the current technology-stock bull market will continue.
Although Advanced Micro Devices (AMD) fell 0.3% that day, NVIDIA rose more than 2% to set a new all-time high, indicating that buying demand for megacap technology stocks remains strong. Expectations are particularly high ahead of the third-quarter earnings season, which begins in the middle of this month.
In a research note, JPMorgan Chase market strategist Mislav Matejka wrote, "Supply-demand conditions within the sector have become much cleaner, and valuations have declined substantially across most areas," adding, "Capital expenditure growth is also likely to remain strong." He went on to say, "With strong net earnings continuing and examples of AI monetization increasing, this should support investors' re-entry into the market."
NVIDIA shares closed at $238.90, up $4.95, or 2.12%, from the previous session.

[email protected] Song Kyung-jae Reporter