Summarized by AI Model:Overglitch/t5-small-cnn-dailymail
Rosenberg is joining investors who are extending their valuation perspective beyond a year . He acknowledges that the AI boom driven by technology is forcing him to reconsider how he views the stock market as a whole .In light of this year’s massive stock run, economist David Rosenberg is reconsidering his negative outlook. According to Rosenberg, the economic potential of AI may justify exorbitant stock market prices. Rosenberg is joining investors who are extending their valuation perspective beyond a year.
Although he claims that his revised perspective does not equal to “throwing in the towel,” he acknowledges that the AI boom driven by technology is forcing him to reconsider how he views the stock market as a whole. “It’s high time for me to stop pontificating on all the reasons why the U.S. stock market is crazily overvalued and all the reasons to be bearish based on all the variables I have relied on in the past,” Rosenberg wrote in a letter to his customers on Thursday.
For many years, Rosenberg has used the current stock market valuations in comparison to the past to demonstrate how historically extreme the current stock market prices are. He’s also not incorrect. This week, seasoned stock investor Ed Yardeni emphasised five charts that demonstrated how valuations have been pushed to all-time highs. However, Rosenberg asserts that if AI can unleash a surge of production on the economy, the exorbitant values might really be justified.
BlackRock mirrored this sentiment in its 2025 assessment, stating that given the significant change in America’s tech-led economy, it is “apples to oranges” to compare market valuations now to those of the past. More significantly, investors are eventually extending their time horizons beyond the conventional one-year vision due to the promise of AI.
“Investors are clearly looking out beyond one year across an entire gamut of indicators and developments, so the classic way we look at valuations may not be appropriate today,” Rosenberg stated. Rosenberg went on to say that, like the internet bubble, which started to grow in the mid-1990s and finally burst in 2000, even if the stock market is in a bubble, it might not be noticeable for years.
The enthusiasm engulfing investors doesn’t seem excessive or unsustainable, as profits for tech firms like Nvidia are soaring. Only when these expectations turn out to have been unrealistic does a bear market break out. “That day might come, but Mr. Market has been saying ‘not quite yet,'” Rosenberg reported.
Although it doesn’t appear likely in the near future, a change in the Federal Reserve’s interest rate policy might also cause markets to decline. According to Rosenberg, he is remaining more receptive to the notion that the stock market’s recent surge may “go further than anyone thinks.” “The way to redress the lament of a bear is to keep an open mind as we head into 2025 and learn from the mistakes of the past year,” Rosenberg stated.
