Billionaire Ray Dalio, founder of Bridgewater Associates, called the Magnificent Seven stocks "bit frothy but not in a full-on bubble," with Alphabet (GOOGL.O), Meta Platforms (META.O), and Tesla (TSLA.O) still "somewhat cheap" and "somewhat expensive."
Dalio posted a study, opens new tab, of the U.S. stock market on LinkedIn on Thursday to evaluate if a price bubble exists amid a prolonged rally.
Google-parent Alphabet, Facebook-parent Meta, Amazon.com (AMZN.O), Nvidia (NVDA.O), Microsoft (MSFT.O), Apple (AAPL.O), and Tesla have surged over 80% since January last year.
Dalio found that the U.S. stock market "doesn't look very bubbly," using a proprietary methodology that considers current prices, new buyers, positive sentiment, and leverage.
Following the application of a proprietary approach that takes into account current prices, new buyers, positive mood, and leverage, Dalio came to the conclusion that the stock market in the United States "does not look very bubbly."
The chief information officer mentor wrote that these levels are not consistent with previous bubbles. "Our readings suggest that, while equities may have rallied meaningfully, we’re unlikely to be in a bubble."
He stated that the market valuation of The Magnificent Seven has, in most cases, been comparable to the company's earnings.
Dalio, on the other hand, has a lower level of confidence in the Magnificent Seven due to the uncertainty that surrounds artificial intelligence.
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