Goldman Sachs says that while the surge in global equities and the dominance of major technology stocks bear some resemblance to past market bubbles, the current rally remains underpinned by solid fundamentals rather than speculation.
I had some on this earlier
digging a little more now:
In the note, Goldman analysts said history shows bubbles typically form around transformative technologies, marked by soaring valuations, excessive leverage, and widespread investor exuberance. Some aspects of today’s market echo those patterns — notably rising valuations, market concentration, and growing capital intensity — but the bank sees key differences.
The appreciation in technology stocks, it said, has so far been driven by real earnings growth, with the largest companies boasting exceptionally strong balance sheets. Moreover, the AI boom remains concentrated among a few incumbents rather than being flooded by speculative newcomers — a hallmark of past bubbles.
Goldman noted that valuations are stretched but not extreme, citing comparisons of price-to-earnings, PEG, and price-to-book ratios with historical bubble periods. While not yet at alarm levels, the bank warned that market concentration and intensifying competition in AI warrant caution, urging investors to maintain diversified portfolios.
This article was written by Eamonn Sheridan at investinglive.com.