Fears of a tech bubble have it backward. Stocks can keep going.

Core Viewpoint - The current stock market, while experiencing some exuberance, is fundamentally different from the late 1990s tech bubble due to companies generating real profits, particularly in the AI sector [1][2][3]. Group 1: Market Comparison - The price performance of stocks today is not comparable to the "insane" valuations seen during the dot-com bubble, with major tech companies being expensive but not at bubble levels [2]. - AI-related tech stocks are benefiting from significant earnings impacts, with Nvidia's stock rise attributed to extreme earnings and sales revisions rather than mere valuation increases [3][4]. - Oracle's stock surged nearly 40% after reporting a much stronger-than-expected AI revenue forecast, projecting cloud infrastructure revenue to reach $144 billion over the next four years, a significant increase from $18 billion this fiscal year [4]. Group 2: Financial Health of Companies - Companies in the current market have substantial excess cash flow, allowing them to buy back stocks while still investing in capital expenditures and R&D, contrasting sharply with the tech bubble era [4][5]. - AI adoption is seen as a transformative expenditure that could lead to substantial productivity gains across various industries [5][7]. Group 3: Market Dynamics - The breadth of AI investment is much wider than the internet-focused trades of the late 1990s, with a quarter of companies adopting AI just three years after the launch of ChatGPT [7]. - Unlike the last two years of the tech bubble, where more stocks were declining than rising, the current market shows a trend of more stocks advancing, indicating a healthier market environment [8]. Group 4: Performance of Major Companies - Companies like Amazon, which were not profitable during the tech bubble, have since become significant players in the market, highlighting a shift in how value is created in the tech space [9]. - The Magnificent 7 stocks have driven much of the gains in the S&P 500, but they are not the top performers in the market this year, with Meta and Alphabet ranking lower in performance [10][11]. Group 5: Investment Strategies - There are opportunities in more value-oriented areas of the market, with a focus on positive earnings revisions and free cash flow, while some strategists anticipate a correction to moderate market enthusiasm [12]. - The S&P 500 experienced a 19% drop at its lowest point this year, but quickly recovered to set new highs, indicating resilience in the market [13].