DBS Group Chief Investment Officer Hou Wey Fook said Nvidia’s valuation and its projected 70% earnings growth next year suggest that AI-driven technology stocks are still a long way from bubble territory. Aggregated data cited in the report showed Nvidia trading at 17 times forward earnings over the next 12 months. Hou contrasted that with Cisco Systems, which was valued at about 100 times earnings before the dot-com bubble burst. In a television interview, he argued that if Nvidia is treated as the representative company for artificial intelligence, it is hard to call the sector a bubble when the stock is trading at only the high-teens multiple. Hou also said semiconductor and AI investments still have tailwinds. For portfolio construction, he recommended a barbell strategy to manage overall volatility: hold technology stocks on the growth side, pair them with investment-grade fixed-income assets for stable returns, and use hedge funds and gold as tools for risk diversification in the middle.
DBS Group Chief Investment Officer Hou Wey Fook said on Oct. 5 that Nvidia’s valuation, together with projected earnings growth of 70% next year, shows AI-driven technology stocks remain well short of bubble territory.
Aggregated data showed Nvidia is currently trading at 17 times forward earnings over the next 12 months. Hou compared that figure with Cisco Systems, which was valued at about 100 times earnings before the dot-com bubble burst.
In a television interview, Hou said, 「If Nvidia is taken as the representative company in artificial intelligence, and its price-to-earnings ratio is only in the teens, how can this be called a bubble?」
He added that semiconductor and artificial intelligence investments still have tailwinds.
Hou also recommended a barbell strategy to control overall portfolio volatility. Under that approach, investors would hold technology stocks on the growth side, pair them with investment-grade fixed-income assets to provide stable income, and use hedge funds and gold as risk-diversification tools in the middle.
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