Wall Street bull Ed Yardeni bets on a "Roaring 2020s," but is more cautious on the AI rally

Odaily News - As a long-time Wall Street bull, Ed Yardeni, President of Yardeni Research, remains highly enthusiastic. He has raised his year-end S&P 500 target three times this year, from 7,700 points to 8,250 points, and then to 8,400 points. He believes the internet bubble back then was largely driven by the fear of missing out (FOMO), with the S&P 500's forward P/E ratio once climbing to 25 times and the tech sector reaching about 55 times. Today, however, the rally is driven by "fantastic earnings momentum" (FEMO). As earnings expectations continue to be revised upward, market valuation multiples have actually declined. Currently, the semiconductor sector's P/E ratio stands at about 17 times, and the overall market at about 20 times—far below levels seen during the 1999 bubble.

Ed Yardeni is more cautious when it comes to the AI rally. He believes there is currently "AI fatigue" in the market, making it difficult to identify the ultimate winners and losers. As such, he does not advise investors to directly chase individual AI stocks. For those looking to gain exposure to the AI theme, a diversified approach through vehicles like the Nasdaq 100 index fund would be more suitable. (Morningstar)