SGMC’s Gomes highlights stretched valuations across leading tech stocks, noting that AI-driven momentum has pushed key equities to elevated levels. The commentary comes as investors weigh growth sustainability against current price multiples.
- NVIDIA (NVDA) trades at a forward P/E above 70, signaling elevated market expectations
- Microsoft (MSFT) and Apple (AAPL) carry forward P/E ratios near 35 and 33, respectively
- AI-related R&D spending by top tech firms rose 20% YoY in 2025
- Market sentiment suggests potential for a 5%–10% correction in high-multiple tech stocks
- Sector rotation shows growing interest in value and cyclical equities
- Valuation concerns may affect funding conditions for AI startups
SGMC’s Gomes has issued a cautionary note on the current state of technology sector valuations, emphasizing that recent gains in AI-centric stocks have pushed price-to-earnings ratios to levels that may not be sustainable. The analysis focuses on major players such as Apple (AAPL), Microsoft (MSFT), Alphabet (GOOGL), NVIDIA (NVDA), and Amazon (AMZN), all of which have seen valuation multiples expand sharply in 2025. NVDA, for instance, trades at a forward P/E exceeding 70, while MSFT and AAPL hover near 35 and 33, respectively—well above their historical averages. The commentary underscores the role of AI investment and cloud infrastructure spending in driving earnings growth, but cautions that these fundamentals may not fully justify current market pricing. Gomes points to historical precedents where technology bubbles formed during periods of rapid innovation, such as the late 1990s and early 2000s, suggesting the market could be pricing in overly optimistic long-term scenarios. He cites a 20% year-over-year increase in R&D outlays by top tech firms as evidence of heightened capital allocation to generative AI and machine learning initiatives. Market reactions have been mixed. While tech-heavy indices like the Nasdaq Composite remain near record highs, some institutional investors have begun trimming exposure to high-multiple names. The divergence is evident in sector rotation patterns, with value-oriented and cyclicals gaining relative strength. Analysts at other firms have echoed concerns, noting that a 5% to 10% pullback in leading tech stocks could trigger broader reevaluations, particularly in growth-focused ETFs and index funds. The implications extend beyond individual stocks, affecting capital allocation decisions for both public and private tech ventures. Startups reliant on late-stage venture funding may face tougher conditions if public market sentiment shifts.