Latest news with #Sløk
Yahoo
21-07-2025
- Business
- Yahoo
AI mania is worse than 1999's tech bubble, Apollo's top economist warns
A top Wall Street economist is sounding the alarm on sky-high valuations in AI stocks — and drawing comparisons to the tech bubble of the late 1990s. "Yes, AI will do incredible things for all of us," Torsten Sløk, chief economist at Apollo Global Management, said on Yahoo Finance's Opening Bid. "But does that mean I should be buying tech companies at any valuation?" (Disclosure: Yahoo Finance is owned by Apollo Global Management.) According to Sløk, the answer is increasingly no. In a research note to clients this week, he pointed to internal data showing the price-to-earnings ratios (P/E) of the 10 largest companies in the S&P 500 (^GSPC) — many of them AI stock picks like Meta (META) and Nvidia (NVDA) — have eclipsed P/E levels seen at the height of the dot-com bubble in 1999. That signals a dangerous concentration of investor exposure in just a handful of tech giants, Sløk argued. "Almost 40% of the S&P 500 is made up by the 10 largest companies," he said. "So if I take $100 as an investor and buy the S&P 500, I think I have exposure to 500 different stocks, but I'm really just betting on the Nvidia and the AI story continuing." In his note, Sløk noted that the current valuations in megacap tech stocks, and the index as a whole, may not be sustainable. His concerns echo a growing unease on Wall Street over how much of the recent stock market rally is driven by AI euphoria and momentum trades. BTIG analysts flagged similar warning signs in a note this week, describing market sentiment as "frothy" and raising the possibility of a near-term pullback in high-flying AI names. Their focus was on the BUZZ NextGen AI Sentiment Index, a benchmark of AI-related stocks popular with retail investors. The index is up 45% over the past 16 weeks and trading 29% above its 200-day moving average. According to BTIG, both are the highest since early 2021, when speculative tech stocks peaked. "Can it get more so like it did in '20-'21? Of course," BTIG analyst Jonathan Krinsky wrote. "But tactically, this feels a bit extreme to us." Krinsky also warned that the index's top holdings, including Rocket Lab (RKLB), Coinbase (COIN), and Unity Software (U), are showing "vertical" chart patterns and are increasingly vulnerable to "short-term shakeouts." The note suggests that investors consider rotating into more defensive sectors, such as utilities or even Chinese tech, which has been consolidating for months. Together, the Apollo and BTIG notes point to a growing split in the market between long-term optimism around AI's potential and near-term concerns that valuations and concentration have gone too far, too fast. Francisco Velasquez is a Reporter at Yahoo Finance. He can be reached on LinkedIn and X, or via email at Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Time of India
19-07-2025
- Business
- Time of India
Trump's tariffs may wreck your holidays — expert warns of a major inflation spike by year-end
When will inflation peak from Donald Trump's tariffs? Live Events Why won't the Fed step in to cut rates? Are we heading for stagflation? FAQs (You can now subscribe to our (You can now subscribe to our Economic Times WhatsApp channel If you intend to spend a lot of money this holiday season, brace yourself. A top Wall Street economist has warned that Donald Trump's new tariffs could send prices skyrocketing by the end of the year. From gifts to groceries, Americans may soon feel the pinch, and the Fed may have no easy to Apollo's chief economist, Torsten Sløk, Trump's tariffs will likely lead to a significant increase in inflation The president announced sweeping tariffs this year, and Torsten Sløk said he believes they will drive up prices until inflation peaks in November or prices rise and growth slows, he warns of stagflation, a worst-case scenario that could postpone Fed rate cuts and affect American households until 2025 or an interview with Bloomberg this week, Sløk cited consensus inflation expectations that indicate inflation will increase during the final two months of the added that consumer goods are already beginning to "lift-off" from inflation. June saw a 0.7% year-over-year increase in durables prices, the second consecutive month of growth following more than two years of annualized declines, according to the most recent consumer price index the headline figure increased, rising from 2.4% in May to 2.7%, as per a report by Business predicted that services inflation, accounting for 60% of the CPI, would likely accelerate in the near also projected that, depending on the status of tariffs in June, the unemployment rate might increase over the next two years, while inflation might stay at about 3% throughout Trump's mass deportations have a negative effect on wage growth, which increases employment costs for businesses and may lead to price increases, he said. "They must wait in order to witness the peak. And in terms of the Fed and inflation, we have essentially only reached the take-off stage," he stated that rising inflation portends bad news on two fronts. Interest rate reductions from the Fed are unlikely. He stated that before making a more significant monetary policy easing move, central bankers will want to evaluate the maximum harm caused by Trump's onset of a stagflation shock could be imminent. Sløk previously wrote to clients that he thought the US was already experiencing a stagflation shock, which is a scenario in which inflation increases while economic growth is one of the worst possible outcomes for the economy, according to economists, because the Fed cannot lower interest rates to spur economic expansion without escalating inflation.A recent whitepaper by Sløk estimated that stagflation could cause GDP growth in 2025 to more than halve from its peak last year, as per a report by Business late 2025, inflation is expected to peak in November or The Fed wants to wait to see the full impact of the tariffs.
Business Insider
19-07-2025
- Business
- Business Insider
‘Today's AI Frenzy Is Worse than 1999's Dot-Com Bubble,' Says Economist
A top economist from Wall Street is warning that AI stock prices may be becoming too high, much like during the dot-com bubble in the late 1990s. Torsten Sløk, chief economist at Apollo Global Management (APO), said on Yahoo Finance's Opening Bid that while AI will likely transform many industries, that doesn't mean investors should buy tech stocks at any price. In a recent note, Sløk shared data showing that the price-to-earnings ratios of the 10 largest companies in the S&P 500—many of which are AI leaders, such as Nvidia (NVDA) and Meta (META) —have now surpassed the extreme levels seen in 1999. Elevate Your Investing Strategy: Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence. Make smarter investment decisions with TipRanks' Smart Investor Picks, delivered to your inbox every week. Sløk explained that this is creating a risky situation where a large part of the market depends on just a few tech giants. He noted that the 10 largest companies now make up almost 40% of the entire S&P 500 (SPY) index. This means that if someone buys the index, thinking they're investing in 500 companies, they're actually heavily exposed to just a few names, especially those tied to AI. Sløk added that the current stock prices of these mega-cap tech companies may not be sustainable since too much of the recent market rally is being driven by excitement and momentum rather than solid fundamentals. Interestingly, analysts at BTIG have similar worries, as they describe the market's sentiment as 'frothy.' Indeed, they pointed to the BUZZ NextGen AI Sentiment Index, which tracks popular AI stocks among retail investors. That index has jumped 45% over the past 16 weeks and is now 29% above its 200-day average. It is worth noting that these levels have not been seen since early 2021, right before speculative tech stocks began to fall. Because of this, BTIG suggested that investors think about shifting to safer areas like utilities or even Chinese tech stocks. Which AI Stock Is the Better Buy? Turning to Wall Street, out of the two stocks mentioned above, analysts think that NVDA stock has more room to run than META, but just barely. In fact, both stocks have almost 6% upside potential from current levels.
Business Insider
18-07-2025
- Business
- Business Insider
Here's when a top economist says the US will see the most damage from Trump's tariffs
Apollo's chief economist says the most damage from Donald Trump's trade war will be felt in the economy sometime around the end of the year. Torsten Sløk said he thinks that the sweeping tariffs the president announced this year will push prices higher until inflation reaches a peak in November or December. Speaking to Bloomberg this week, Sløk pointed to consensus inflation expectations, which show inflation rising through the last two months of the year. Inflation, meanwhile, is already starting to "lift-off" in consumer goods, he said. The latest consumer price index report showed that prices for durables grew 0.7% year-over-year in June, the second-straight month of growth after more than two years of annualized declines. The headline number also drifted higher, hitting 2.7%, from 2.4% in May. Services inflation, which accounts for 60% of the CPI, will likely take off soon as well, Sløk said. He pointed to the impact of Trump's mass deportations on wage growth, which raises employment costs for businesses and can cause prices to rise as well. "They need to wait to see the peak. And we have really only had the take-off stage," he said of the Fed and inflation Hotter inflation spells bad news on two fronts, Sløk said: The Fed is unlikely to cut interest rates. Central bankers will want to assess the peak damage from Trump's tariffs before loosening monetary policy more meaningfully, he said. It could be the start of a stagflation shock. In a previous note to clients, Sløk said he believed the US was already beginning to see a stagflation shock, a situation where inflation rises while economic growth slows. Economists have described stagflation as one of the worst-case scenarios for the economy, as the Fed can't cut rates to boost economic growth without fanning inflation. Stagflation could cause GDP growth in 2025 could more than halve from its peak last year, Sløk estimated in a recent whitepaper. Inflation could also remain around 3% throughout 2025, while the unemployment rate could rise over the next two years, he predicted, based on where tariffs stood in June.
Economic Times
18-07-2025
- Business
- Economic Times
AI stocks in bubble trouble - are Nvidia, Microsoft in danger? Economist says it's worse than the Dot-Com crash of 1999
Are we heading toward another tech market crash, one that is even bigger than the dot-com collapse of the late '90s? According to Torsten Sløk, chief economist at Apollo Global Management, we might be, and this time, the bubble is being driven by artificial intelligence, as per a a recent research note, Sløk warned that stocks like Nvidia, Microsoft, and Apple, along with seven other companies, have soared so high on AI enthusiasm that their prices are now dangerously detached from reality, as per a Fortune report. Sløk wrote in his research note that, 'The difference between the IT bubble in the 1990s and the AI bubble today is that the top 10 companies in the S&P 500 today are more overvalued than they were in the 1990s,' as quoted by Fortune in its to the report, currently investors are betting so heavily on AI that the stock price of companies like Nvidia, Microsoft, Apple and others have become detached from their earnings. ALSO READ: Why can't this Wells Fargo banker leave China? The Chenyue Mao case everyone's talking about Sløk even included a chart to explain his analysis, as per Fortune. In the chart, he compared the 12-month forward price-to-earnings (P/E) ratios of the S&P's top 10 companies to the rest of the index and the S&P 500 as a whole, which shows that today's bubble is even bigger than the one that marked the end of the dot-com era, as reported by to the Fortune report, although most of those top companies are profitable, compared to the losses of many dot-com darlings before the market crash at that time, the fundamentals do not justify the READ: OpenAI unveils ChatGPT Agent: Too tired to plan your date, shop online, or create a slide deck? This new AI tool has you covered Even though the S&P has hit new records recently and is currently close to an all-time high, Sløk pointed out that the performance boost is mainly because of the rise of the Top 10 stocks, according to the Fortune is concerned that investors are buying the hype and paying prices as if the promises and boasts of these firms, like claims of trillion-dollar savings and world-changing breakthroughs, are already a certainty, as per the report. The Fortune report highlighted that the 1990s were a lesson that not every promise would or could actually become a reality. Sløk's not the only warning sounding the alarm, even Alibaba Group Chair Joe Tsai has warned that US AI stocks are in a bubble, as has long-time tech exec Tom Siebel, as reported by Fortune. ALSO READ: Biggest piece of Mars on Earth sells for $5.3 million — meet the meteorite that shocked Sotheby's Why are people investing so heavily in AI?Because AI is seen as the next big revolution, capable of saving companies money, transforming industries, and driving future growth, as per the Fortune report. Are companies like Nvidia and Microsoft really in danger? They're strong businesses, but if their stock prices are built on unrealistic expectations, any disappointment could cause a sharp drop, as per Torsten Sløk's analysis.
