A Goldman Sachs executive says the current AI boom doesn’t yet resemble the dot-com bubble as stock market leaders continue to tout strong balance sheets.
In a new episode of the bank’s The Breaks of the Game podcast, Tony Pasquariello, head of hedge fund client coverage at Goldman Sachs, says today’s leaders are more profitable and better capitalized than the market darlings of 1999 and 2000.
He cites research from Goldman’s chief global equity strategist Peter Oppenheimer showing that top-index stocks today are in a much better financial footing than those from the dot-com era.
“I think Peter Oppenheimer did some very good work that is just grounded in data and history. And his conclusion was it is not a bubble, not yet anyway, because the stocks that comprise the top of the index today more profitable and less highly valued, and have considerably better balance sheets than those that were at the top of the index circa 99 in 2000. So I think that is super reasonable, and I agree with that.”
Pasquariello cautions, however, that the bullish markets tend to crescendo in a final “blow-off” phase.
“I borrowed from Paul Tudor Jones on this — the Nasdaq began to rally in 1991, rallies every year 91 through 98, kind of picking up gradient as we move through. And then in 1999, it doubled. Yeah. So that last gasp is often the most crazy. Doesn’t feel like we’ve had that pitch yet.”
Dominic Wilson, senior advisor at Goldman Sachs Research, echoes the optimism on fundamentals but flagged a growing reliance on debt to finance the AI boom.
“There is more debt financing of the data-center spend. … If we keep this boom going, which I think we will, the chances that you have somewhat more concerns around these issues 12, 24 months down the track, I think are pretty high.”
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