UPDATE: Alger Funds CEO Dan Chung declares the current AI stock surge is not a bubble but a genuine boom, offering promising returns for investors. In a recent interview, Chung emphasized that the market has ample room for growth, contrasting today’s landscape with the dot-com bubble of the late 1990s.
Investors are witnessing substantial gains, with stocks tied to artificial intelligence technologies soaring. However, some experts warn that the current environment mirrors the speculative frenzy preceding the dot-com crash. Chung, who experienced the dot-com era firsthand, argues that the fundamentals backing today’s AI companies are significantly stronger.
Chung, now at the helm of Alger Funds, which manages over $33 billion, co-manages several successful funds, including the Alger 35 ETF, which has surged 51.83% over the past year. He believes that the AI-driven market still has “at least 1998 and 1999” growth potential ahead.
“We’re in the middle stages of the boom. You don’t want to miss the second half,” Chung stated, referencing the lost opportunities that followed the dot-com bubble’s peak.
Comparing today’s AI leaders like Nvidia, Microsoft, Amazon, and Google with past tech giants, Chung noted that while the dot-com era saw companies like Yahoo trading at exorbitant P/E ratios of 350, today’s leaders maintain much more reasonable valuations. For instance, Nvidia’s current P/E stands at 33.5 times earnings, showcasing robust fundamentals.
Chung pointed out that the financial metrics of today’s AI companies are far superior to those from 1999. “The revenue growth, margins, and free cash flow are vastly superior to what they were at the top of the dot-com bubble,” he explained. “The economy is stable, and the fundamentals are strong.”
As AI technologies continue to evolve, Chung remains bullish on stocks like Nvidia. “It’s not the time to sell Nvidia,” he insisted, highlighting the company’s substantial growth potential.
He also spotlighted Nebius, an emerging leader in AI data centers, which is projected to grow by 400% this year. Chung expressed confidence in Nebius’s future, forecasting its revenues could soar from over $500 million in 2025 to over $2.5 billion in 2026.
The AI market is evolving rapidly, with Chung suggesting the total addressable market for AI tech could reach $2 trillion to $3 trillion by 2030-2031. This optimistic outlook stems from the transformative potential of AI across various sectors.
As the AI landscape continues to develop, investors are urged to stay informed and consider the long-term implications of their investments. Chung’s insights serve as a timely reminder of the opportunities that lie ahead in the AI sector, driving the narrative that today’s market is not just a fleeting trend but a fundamental shift in technology and investment.
The urgency to engage with this market is palpable as Chung encourages investors to capitalize on the momentum while it lasts. With promising stocks on the rise, the conversation around AI is set to dominate financial discussions in the coming months.
Stay tuned for more updates as the AI boom unfolds.
