Goldman Sachs: No US stock market bubble yet

Goldman Sachs analyst says while some market behaviors and pricing today resemble past bubbles, there are key differences from a true bubble.

Analysts at Goldman Sachs believe that the US stock market has not yet entered a bubble phase, despite elevated valuations at present.

Peter Oppenheimer, Chief Global Equity Strategist at the American bank, stated that while some market behaviors and pricing today resemble past bubbles, there are key differences that prevent the current environment from being classified as a true bubble.

In a note cited by Yahoo Finance, Oppenheimer explained that valuations are rising, the market is being led by a narrow group of stocks, and capital intensity is increasing. He noted that the funding dynamics in AI today are similar to those seen during the tech bubble of the late 1990s.

However, he emphasized that bubbles typically form when the market capitalization of companies tied to new technologies exceeds the realistic cash flows they can generate, which has not yet occurred.

The analyst added that the current rise in valuations is supported by solid fundamentals, not irrational speculation on future growth.

He also noted that the biggest winners in today’s market, such as leading AI and cloud computing firms, have strong balance sheets, offering a level of protection not available to many dot-com companies in the past.