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

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Aswath Damodaran says that technology stocks have likely become overvalued following massive runs-ups. Aswath Damodaran, finance professor at the New York University Stern School of Business, said that tech giants such as Apple, Microsoft, and Alphabet, have experienced so much growth in 2023. Shares are likely in a “boom-and-bust” phase. Damodaran said on CNBC’s Closing Bell that a company with a rise of this magnitude is more likely to have an overvalued price than one undervalued. You can’t expect a 40% increase in a company of this size, without some overvaluation. Apple and Microsoft’s shares have each gained almost 38% since the beginning of the year. Alphabet, Nvidia, and Microsoft, however, have seen their share prices soar by 53% and 216%. Damodaran said that this wasn’t always true. He said that as recently as January some of the biggest players in the technology sector were undervalued. He said that as the end of the calendar year approaches, this trend may change, even if the investor sentiment is strong. He added, “I don’t believe these companies will be able to do it if the markets are going to be tearing the rest of the calendar year.”