Shares of technology companies experienced a slight dip as the excitement surrounding artificial intelligence (AI) cooled down in certain niches. While AI darlings Microsoft and Advanced Micro Devices saw a small decrease in their shares, British chip designer Arm enjoyed a surge of over 20%. This rally has been ongoing since last week when Arm released a positive outlook, highlighting the increasing demand driven by the rise of artificial intelligence. In a show of solidarity, Softbank, a major investor in Arm, also experienced an increase in their own shares.
J.D. Joyce, the president of Houston financial advisory firm Joyce Wealth Management, views this as yet another vote of confidence for the potential of AI. He notes that although valuations are rising, speculation has not reached the levels seen in 1999. Currently, multiples are slightly up, with SPX trading at over 20 times. Despite the higher multiples, Joyce points out that these high-growth companies are also contributing to earnings. Overall, the market does not appear to be overly rich but rather slightly rich.
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