Top European Fund Manager Warns of US Tech Bubble 2.0
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Top European Fund Manager Warns of US Tech Bubble 2.0

Despite stellar earnings and unflagging hype around AI and tech this year, Vincent Mortier believes investors have become irrationally exuberant.
Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our website policy prior to making financial decisions.

As technology stocks continue their meteoric rise, fueling optimism in global equity markets, one of Europe’s top investment managers is sounding the alarm. Vincent Mortier, Chief Investment Officer of Amundi SA, believes US tech valuations have become dangerously overheated, echoing concerns about a potential repeat of the dot-com bubble burst.

Despite stellar earnings from FAANG and semiconductor giants this year, Mortier cautions that irrational exuberance, overconfidence in AI, and disinflation have distorted asset prices.

Europe’s Biggest Fund Manager Says US Tech Stocks Overrated

According to Vincent Mortier, Europe’s biggest fund manager, and Chief Investment Officer of Amundi SA, US tech stocks are currently overpriced. Mortier cites overconfidence in disinflation and misplaced optimism in technology stocks as reasons for inflated investor payments.

Despite potential short-term gains, Amundi SA, with assets of $2.1 trillion, is avoiding the surge in big tech stocks. Mortier emphasizes the importance of maintaining their current investment positioning to benefit in the long run and does not see the rally lasting in the long term.

The S&P 500 and Europe’s benchmark index have seen significant gains fueled by hopes about rate cuts and artificial intelligence, with major tech stocks benefiting the most. However, Mortier notes similarities to the dot-com bubble era and concerns from the 2007 financial crisis, referencing the overvaluation and volatility in the market.

Magnificent Seven’s Performance in 2024

The S&P 500 (SPX) has increased by 4.22% so far this year, setting a moderate benchmark for the broader market. Among the tech behemoths, Apple (NASDAQ: AAPL) and Google’s parent Alphabet Inc (NASDAQ: GOOG) have seen modest gains of 1.10% and 3.85%, respectively. In contrast, Microsoft (NASDAQ: MSFT) (9.38%), Amazon (NASDAQ: AMZN) (13.38%), and Meta (NASDAQ: META) (a staggering 34.63%) have outperformed the index, reflecting investor enthusiasm for their growth prospects. However, not all tech stocks have shared in this optimism.

Tesla (NASDAQ: TSLA), once a market darling, has experienced a significant decline of 28.39%, likely due to concerns about its competitive landscape. On the other hand, Nvidia (NASDAQ: NVDA) has emerged as a standout performer, surging by an impressive 44.62% on the back of strong demand for its chips, particularly in the artificial intelligence and gaming sectors.

Do you think US Big Tech stocks are currently overpriced? Let us know in the comments below.

Disclaimer: The author does not hold or have a position in any securities discussed in the article.