Former Morgan Stanley Chief Strategist warns: U.S. stocks are approaching "bubble peak"!
Former Chief Strategist of JP Morgan, Marko Kolanovic, warned that the US stock market is approaching a "bubble peak," primarily due to the excessive influence of large technology stocks. He pointed out that the recent rapid rise in the stock prices of tech giants has led to distorted market valuations, with an overall market capitalization that is inflated. Kolanovic mentioned that the market capitalization of companies like Microsoft and NVIDIA has exceeded that of entire industries or major national indices, indicating that the market may face the risk of a bubble burst. Many analysts share a similar view, believing that the US stock market is at the peak stage of an artificial intelligence bubble
According to the Zhitong Finance APP, Marko Kolanovic, former chief strategist at JP Morgan, has issued a warning that the U.S. stock market is a growing market bubble, primarily due to the excessive influence of large technology stocks. Kolanovic stated that the recent significant rise in valuations is distorting the true state of market strength, with the stock price increases of some tech giants leading to an inflated overall market capitalization of U.S. stocks.
Kolanovic said, "Basically, when the market capitalization of those largest tech companies (such as Microsoft (MSFT.US) and NVIDIA (NVDA.US)) exceeds the total market capitalization of the entire U.S. industry group or major national index overnight, or reaches the total market capitalization of the entire S&P small-cap index (like NVIDIA) within three months, it indicates that we are approaching the peak of the bubble."
His remarks came after a historic rise in large tech stocks. On Thursday, Microsoft's market capitalization surpassed the $4 trillion mark for the first time. This tech giant became the second company to reach this milestone after AI giant NVIDIA, thus joining this very exclusive group. However, Kolanovic warned that this concentrated rise may be difficult to sustain, pointing out that the entire market is gradually decoupling from economic fundamentals.
Moreover, Kolanovic is not the only one conveying the same viewpoint. Many analysts from Seeking Alpha share similar logical reasoning.
Overall, these analysts mainly believe that the valuation of the S&P 500 index is extremely high, with the Shiller price-to-earnings ratio exceeding 37, which is just shy of the levels seen during the 2000 internet bubble; the U.S. stock market is at the peak stage of an AI bubble, driven by fervent sentiment, excessive valuations, and fear of missing out, with expectations that the stock market bubble will burst in the second half of this year
