DBS CIO says NVIDIA's valuation is not high, and AI the stock remains far from bubble territory
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AT A GLANCE
The DBS Chief Investment Officer believes NVIDIA’s valuation is not high,AI and that technology stocks remain far from bubble territory.
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DBS Chief Investment Officer: NVIDIA’s valuation remains low,AI stock is far from becoming a bubble
PANews October 5 reported that DBS Group Chief Investment Officer Hou Wey Fook said NVIDIA’s price-to-earnings ratio and projected earnings growth next year 70%indicate that technology stocks driven by artificial intelligence remain a long way from bubble territory. Aggregated data show that NVIDIA’s current forward 12 months’ price-to-earnings ratio is 17 times. Hou compared this with the valuation of approximately 100 times for Cisco Systems before the dot-com bubble burst. In a television interview, he said: “If NVIDIA is defined as the representative company in the artificial intelligence sector, and its current price-to-earnings ratio is only in the teens, how can this be called a bubble?” He added that semiconductor and artificial intelligence investments still have “tailwinds.” However, Hou recommended adopting a “barbell strategy” to “control overall portfolio volatility,” allocating to technology stocks on the growth side while pairing them with investment-grade fixed-income assets to provide stable returns, and allocating to hedge funds and gold...
Key points
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DBS Group Chief Investment Officer Hou Wey Fook said that NVIDIA’s price-to-earnings ratio and projected earnings growth next year of 70%indicate that AI technology stocks remain a long way from bubble territory.
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Aggregated data show that NVIDIA’s current forward 12 months’ price-to-earnings ratio is 17 times.
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Hou compared NVIDIA with the valuation of approximately 100 times for Cisco Systems before the dot-com bubble burst.
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Hou said that semiconductor and artificial intelligence investments still have “tailwinds.”
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Hou recommended adopting a “barbell strategy,” allocating to technology stocks on the growth side while pairing them with investment-grade fixed-income assets to provide stable returns.
AI-assisted interpretation
The following is analysis, separate from reported facts. Verify important claims independently.
This is the view of an investment institution executive on the valuation of AI stocks. He believes NVIDIA’s expected valuation is lower than that of Cisco Systems during the dot-com bubble, and therefore AI stocks cannot be deemed to have formed a bubble based solely on their current valuation. He also recommended pairing technology stocks with relatively stable investment-grade fixed-income assets to control portfolio volatility.
Why it matters to readers
This view supports the narrative that AI technology stocks have not yet become a bubble, but it is the assessment of an executive at a single institution. Investors should continue to monitor NVIDIA’s subsequent earnings growth and changes in its valuation.
The price-to-earnings ratio is a measure of a stock price relative to earnings per share; the forward 12 months’ price-to-earnings ratio is calculated using earnings expectations for the subsequent 1 years. A barbell strategy involves allocating simultaneously to growth assets and relatively stable assets.
Risks and unknowns
The original text does not provide the specific source of NVIDIA’s projected 70%earnings growth next year.
The original content is truncated after mentioning hedge funds and gold, so the complete allocation recommendation cannot be confirmed.
This information primarily reflects the views of Hou Wey Fook and does not represent evidence that AI technology stocks have been comprehensively verified as not being in a bubble.
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Price-to-earnings ratio
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