Tech sector's lofty valuations raise bubble fears, Apollo's Sløk says

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The rise in U.S. technology stocks is quite similar to the late-1990s IT bubble, with valuations set at levels that put the sector more and more exposed, Apollo Academy chief economist Torsten Sløk warned.

The technology sector has long been the driver of gains in the stock market. But, even though artificial intelligence has had a significant impact on society, it does not mean that the tech companies in the S&P 500 are correctly priced, Sløk said.

The P/E ratio for Tesla is almost 200, and the P/E ratio for Nvidia is around 60. While AI is expected to transform industries, Sløk believes its rapid development could also pose risks to software companies and even put them out of business because of ChatGPT.

"The bottom line is that it is not clear that the tech stocks in the S&P 500 are the best choices when investing in the AI theme," Sløk.

[Tech chart]
Apollo

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