Siegel identified signs of over-speculation in AI stocks, with the 'Magnificent Seven' mega-cap companies dominating the market and accounting for most of the S&P 500's gains in 2023. He stopped short of calling it a bubble, but warned that the trend could continue until a significant earnings miss occurs. Despite this, Siegel believes stocks are currently "reasonably priced", with the S&P 500 trading at an earnings multiple of around 20x, significantly less than during the dot-com bubble of the 2000s.
Key takeaways:
- Jeremy Siegel, a top economist, warns that the stock market's impressive 15-year performance following the 2008 financial crisis cannot continue indefinitely.
- Siegel also expressed concern about the over-speculation and frenzy surrounding AI mega-cap tech stocks, suggesting that this trend may not end well.
- Despite the hype, Siegel does not believe the market is in a bubble at these levels, and considers stocks to be 'reasonably priced' with the S&P 500 trading at an earnings multiple of around 20x.
- Despite his caution around big-cap tech, Siegel remains bullish on stocks overall, predicting that the S&P 500 could rise another 8% from its current levels by the end of the year.