Mark Matthews of Bank Julius Baer & Co said the technology-led market shows signs of exuberance, but it is not a bubble. “Exuberance, yes, but this is something that I think can continue to persist,” he said, citing Nvidia as an example. The stock trades at about 32–35 times next year’s earnings, higher than the S&P 500’s long-term average of 15 times. Matthews added, “A bubble is something you start talking about above 40, maybe even above 50 times P/E.”He noted that while artificial intelligence (AI) spending may exceed short-term returns, its benefits are appearing in broader corporate America, particularly in rising revenue per worker. “I suspect it is related to AI to some degree,” Matthews said, comparing the impact to PCs in the 1980s, the internet in the 1990s, and cloud computing in the 2000s.
Also Read | EXCLUSIVE: India should remain America’s best friend despite non-alignment, says JPMorgan CEO Jamie Dimon
Matthews said past shutdowns had limited effects on potential US government disruptions. “Eventually, they agree to an extension of the debt ceiling, and things come back online,” he said.He also noted that the Federal Reserve is focusing on the labour market, adding, “In the labour market, you have very little firing, but you also have minimal hiring.”
Matthews concluded that while valuations are high, the market is willing to give leading tech companies the benefit of the doubt, but only time will tell if growth will meet expectations.
For the full interview, watch the accompanying video
Catch all the latest updates from the stock market here
