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Here's why one expert says scorching-hot tech stocks are far less vulnerable than they were during the dot-com bubble a?? and why they can keep climbing

Here's why one expert says scorching-hot tech stocks are far less vulnerable than they were during the dot-com bubble a?? and why they can keep climbing




Tech stocks' rally from mid-March lows is fueling concerns of another market bubble, but history shows the shares are fairly valued, James Paulsen, chief investment strategist at The Leuthold Group, said.




Though tech companies now comprise roughly 27% of the S&P 500's market cap, their sales contribute to a greater share of nominal GDP than they did in the dot-com era, Paulsen said.




While the early 2000s saw a "true bubble — where asset prices rose much faster than underlying fundamentals," today's tech names drive more economic growth and still aren't reaching past market weightings, he added.




Tech stocks' market cap relative to economic contribution also shows stock prices sitting at levels seen after the dot-com bubble burst, the strategist found.




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Today's rallying tech stocks won't repeat the 2000 "tech-bubble" tumble because they aren't forming a true bubble at all, James Paulsen, chief investment strategist at The Leuthold Group, said.
The tech sector drove the bulk of the stock market's upswing from mid-March lows and now comprises roughly 27% of the S&P 500's market cap. Several analysts have highlighted the swelling concentration as a red flag for investors, forecasting a correction similar to that seen when the dot-com bubble burst.
Paulsen doesn't share their concerns, and instead sees one long-term trend protecting tech stocks from a burst-bubble downturn. Though tech companies are contributing more to the S&P 500's gain, their sales make up a larger proportion of the US's nominal gross domestic product than they did in 2000.
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