DBS Says Nvidia Valuation Proves AI Rally Not a Bubble

DBS Group’s Chief Investment Officer Hou Wey Fook argues that the current rally in artificial intelligence-driven technology stocks, particularly Nvidia Corp., does not indicate a bubble. He points to Nvidia’s price-to-earnings multiple of 17 times its 12-month forward earnings and a projected 70% earnings growth for next year as evidence of sustainable growth.

Hou compared Nvidia’s valuation to Cisco System Inc.’s 100 times valuation before the dot-com crash, emphasizing the stark contrast in multiples. This comparison underscores his belief that today’s AI-driven stock performance is fundamentally supported rather than speculative.

Beyond equities, Hou highlighted the appeal of investment-grade bonds yielding above 5%, which he described as offering an attractive source of income and portfolio stability. This dual focus on equities and bonds reflects a balanced investment strategy amid the AI boom.