Twenty-five years after the dot-com crash, Goldman Sachs says tech not in a bubble
Seeking Alpha News (Fri, 28-Mar 11:43 AM)
This week marks the 25th anniversary of the global stock market crash triggered by the burst of the dot-com tech bubble in March 2000.
More than two decades later, technology stocks are still the cream of the crop when it comes to equities. After two years of massive growth driven by the artificial intelligence trade, technology stocks have recently come under pressure and bubble talk has again resurfaced.
According to Goldman Sachs, a key difference between today’s leading tech companies and those of the early 2000’s is the more reasonable valuations and stronger sector fundamentals. While the tech bubble once led to extreme market speculation, today's technology giants have more solid financial backing, positioning them for long-term growth.
“We continue to believe that the technology sector is not in a bubble and that there remain attractive investment opportunities,” Goldman Sachs said in a recent investor note.
“A central driver of bubbles in the past has been not just strong performance but rising valuations that reach a level that makes an unrealistic claim on future potential revenues. We have argued that while enthusiasm for technology stocks has risen sharply in recent years, this has not represented a bubble because the price appreciation has been justified by strong profit fundamentals,” Goldman Sachs added.
While the investment bank did not provide insight on any tech stocks specifically, Seeking Alpha highlighted the 15 largest tech stocks by market cap ranked by SA's Quant metrics:
No. 15: Applied Materials (NASDAQ:AMAT), quant grade of 2.97.
No. 14: Texas Instruments (NASDAQ:TXN), quant grade of 3.09.
No. 13: Oracle (NYSE:ORCL), quant grade of 3.19.
No. 12: Accenture (NYSE:ACN), quant grade of 3.20.
No. 11: ASML Holding (NASDAQ:ASML), quant grade of 3.30.
No. 10: Intuit (NASDAQ:INTU), quant grade of 3.36.
No. 9: IBM (NYSE:IBM), quant grade of 3.36.
No. 8: SAP SE (NYSE:SAP), quant grade of 3.40.
No. 7: Apple (NASDAQ:AAPL), quant grade of 3.41.
No. 6: QUALCOMM (NASDAQ:QCOM), quant grade of 3.45.
No. 5: Microsoft (NASDAQ:MSFT), quant grade of 3.47.
No. 4: Nvidia (NASDAQ:NVDA), quant grade of 3.47.
No. 3: Broadcom (NASDAQ:AVGO), quant grade of 3.48.
No. 2: Cisco Systems (NASDAQ:CSCO), quant grade of 3.48.
No. 1: Taiwan Semiconductor Manufacturing Company (NYSE:TSM), quant grade of 4.84.
For reference, Seeking Alpha's Quant system is driven by powerful computer processing and SA's special 'Quantamental' analysis. It awards grades to stocks based on collective value, growth, profitability, earnings per share revisions, and price momentum metrics.
Furthermore, see some Technology ETFs for further exposure: (NYSEARCA:VGT), (NYSEARCA:XLK), (NYSEARCA:IYW), (NYSEARCA:FTEC), (NYSEARCA:IXN), and (NYSEARCA:RSPT).
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