As the U.S. stock market continues its climb, investors holding shares of the massive tech and growth companies leading the charge are debating whether to cash out or stay on for the ride.
“We had this big run and the essential question is, do you believe it’s going to continue or do you believe things are going to return to the mean?” said Peter Tuz, president of Chase Investment Counsel. “We 100% believe in the AI boom,” Hatfield said. “I would be shocked if by the end of the year these stocks are not significantly higher.”
Kevin Mahn, chief investment officer at Hennion & Walsh Asset Management, said shares of Nvidia, which now trade at 44 times forward earnings estimates, according to Refinitiv Datastream, have become “a little rich.” The performance of just seven stocks, Apple, Microsoft, Alphabet, Amazon, Nvdia, Meta Platforms and Tesla, accounted for all of the S&P 500′s 2023 total return through May, according to S&P Dow Jones Indices.
Kotok views narrowing breadth as an ominous sign for the broader stock market, saying that equities also look less favorable in certain asset valuation metrics.