Despite his previous reservations about the sustainability of tech's growth, Damodaran now sees these leading tech firms as "insanely profitable" cash machines. He highlights their ability to scale up revenue and growth, particularly in the field of artificial intelligence. He cites Nvidia as an example, a company he previously divested from, which has since seen its shares rise by 179% year-to-date due to its profitable role in AI hardware creation.
Key takeaways:
- Aswath Damodaran, an NYU finance professor, suggests that investors should buy top tech stocks during a market correction, despite high valuations.
- Damodaran warns that the market is ignoring the risk of a significant global event in the near future, which could lead to a crisis.
- He recommends investing in the 'Magnificent Seven' stocks, which include mega-cap companies like Amazon, Meta, and Tesla, during a crisis as they are highly profitable and drive the economy and the market.
- Damodaran previously warned against unsustainable value investing in tech companies, but now acknowledges the profitability of these companies, particularly Nvidia, which he considers the only firm to have profited from artificial intelligence.