Nvidia Corp.’s price-to-earnings multiple and projected 70% earnings growth for next year demonstrate that artificial intelligence-driven technology stocks remain far from bubble territory, DBS Group Chief Investment Officer Hou Wey Fook said.
Nvidia trades at 17 times its 12-month forward earnings, data compiled by Bloomberg showed, which Hou compared to Cisco System Inc.’s 100 times valuation before the dot-com crash.
“If I describe the poster child of AI trading at mid-teens, how can it be a bubble?” he said in a Bloomberg TV interview, adding that there are still “tailwinds to this play on the semiconductor, this play on AI.”
Still, Hou advocates a “barbell” approach to “control the overall volatility of the portfolio” with AI, pairing technology stocks on the growth side with investment-grade fixed income for income stability, along with hedge funds and gold serving as risk diversifiers in the middle.
This story was produced with the assistance of Bloomberg Automation.