In early January, in a column titled How Asian investors should look at US stocks in 2024, I noted that while 2023 was a great year for American stocks, led by Big Tech, with the S&P 500 up a whopping 26.4%, 2024 might turn out to be an even better year. I argued that US stocks were in a secular bull market powered by earnings growth and the advent of generative AI, or Gen AI.
For some weeks now, AI chip icon Nvidia, software behemoth Microsoft, and iPhone maker Apple have been locked in a fierce battle for the title of the world’s most valuable company. Two weeks ago, Apple pipped Microsoft only to cede the title back to its arch-rival. Then, on June 18, Nvidia edged past both, only to see its own reign last just two days as investors rushed to take profits in runaway chip stocks. The US barometer Standard & Poor’s 500 and tech-heavy Nasdaq Composite indices touched new all-time highs of 5,503 and 17,936 last week only to pull back a little as Nvidia sold off.
Is the world witnessing a huge tech-led melt-up? Or the unfolding of a blow-off top — a sudden rise in stock prices with high volumes followed by a sharp pullback, often with even higher volumes? Is the bull market intact, or is the Wall Street AI-powered tech bubble about to pop?
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