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Tech stocks are likely overvalued and will run out of steam by year-end, Aswath Damodaran says

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Tech stocks will have a hard time keeping up their gains even if Wall Street remains strong for the rest of 2023, according to Aswath Damodaran.

Technology stocks are likely overvalued after massive run-ups, according to Aswath Damodaran. The New York University Stern School of Business finance professor said tech giants including Apple , Microsoft and Alphabet have seen such large gains so far in 2023, shares are potentially in the middle of a "boom and bust" period.

"You don't get a 40% run-up on companies of this size without expecting some degree of overvaluation." Shares of Apple and Microsoft have both gained nearly 38% each from the start of the year, while Alphabet and Nvidia have soared 53% and 216%, respectively. That wasn't always the case, Damodaran added. As recently as January, some of the bigger players in the tech sector were skewed to an undervaluation, he said.

 

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