Howard Marks is increasingly critical of the reviews on the US stock market. While he considers the majority of the companies to be too expensive in the S&P 500, he makes an exception to the technology giants. Nvidia in particular stands for him as an example of substance instead of exaggeration.
• According to Marks, the “Magnificent Seven” are not overrated despite high courses
• Nvidia is considered the “hottest” stock under the MAG-7
• The rest of the S&P 500 are well above the historical level of evaluation
Big Tech with robust foundations
Marks explains in his memo “On Bubble Watch”, which is why he does not consider the large US technology values to be excessive. As Marketwatch shows, the average price-profit ratio of the “Magnificent Seven” includes, including Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla, currently at around 33. For Marks, the value is justified in view of the dominant market position and the profit development of these companies.
NVIDIA share focused on
Marks considers the chip group Nvidia to be particularly interesting. According to Valueinvesting, he even described the company as the “hottest stock” of the “Magnificent Seven”. Despite the strong course increases in recent years, Marks does not see the assessment as excessive. On the contrary: the enormous demand for AI chips gives Nvidia a special position in the market. For him, the company is a prime example of the fact that high courses can also be based on solid foundations.
Overvaluation in the broad market
The star investor is significantly less optimistic about the rest of the S&P 500. The average KGV of the other index members is around 22 – and thus well above the average of previous market phases. According to Marks, many investors did not invest out of conviction, but out of fear of missing a rally.
Risk spamping jumps on “Worry”
In his analysis, Marks makes it clear that investors should not underestimate the current market situation. In the memo “The Calculus of Value”, he warns that the ratings of many shares have moved away from the real company value. The co -founder of Oaktree Capital sees no acute blistering, but he speaks of a phase of increased caution. Marks also draws parallels to the Dotcom period, even if he currently considers the situation not comparable. For investors, this means that those who are more selective and rely on quality titles such as Nvidia could be better positioned than with broad market engagement.
Editor finance.net
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