over 2 years ago • 1 min
US tech stocks hit the highest valuation on record compared to their revenue on Tuesday, eclipsing the previous high reached in March 2000 – just before the dotcom bubble popped.
The S&P 500 Information Technology Index, which includes iPhone maker Apple and chipmaker Intel, currently trades for 7.5x its companies reported sales. That’s more than double the 2.9x average valuation over the past 30 years.
To be fair, valuations don’t look quite as stretched when compared to profits rather than revenue: companies in the index trade at 36x reported earnings, compared to a massive 79x in March 2000. But with US consumer prices exceeding economists’ forecasts to surge by the most in 13 years, it might not take much for inflation-sensitive tech stocks to see a pull-back from these levels.
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