2024-07-21 20:50:24
Investing.com – Tech stocks are under increased scrutiny as big names in the sector pull back from their recent highs, raising concerns that momentum in the artificial intelligence market may be losing steam, which could be a sign on an impending correction or even collapse.
Albert Edwards, chief global strategist at Société Générale, highlighted these concerns in a recent note published on Thursday, predicting stock market turmoil for 2024.
“Over time, few of us who saw the crashes of 2000 and 1987 are still active in the industry. I was present at both and learned that complacency is the enemy; the harbingers of disaster are always present, not necessarily you just know where to look,” said Edwards.
He noted that the technology sector currently accounts for 35% of the S&P 500, the largest representation in the index since the early 2000s, the period before the dot com bubble burst.
Edwards also cited profit growth projections for the technology sector, which are estimated to be around 30% per year – a level that greatly increases the risk of market volatility.
The technology sector’s price-to-earnings (P/E) ratio, valued at about 32 times forward earnings, is significantly stretched compared to the S&P 500’s P/E, which sits just above 20.” lays a time bomb in the evaluations. information technology sector”, declared Edwards.
He concluded that a decline in expected earnings per share may have caused these tech bubbles to burst.
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