**: Global Market Broadcast.
Matthew Poterba, an analyst at Richard Bernstein Advisors (RBA), a leading U.S. investment advisory firm, said the influx of capital into a handful of U.S. stocks has made the market look like "a rubber band about to break."
"Valuations tend to act like rubber bands, heavily influenced by investor psychology and sentiment," he wrote in a note released Wednesday. ”
As this sentiment normalizes, it will cut US gains** and boost valuations in largely ignored international markets.
"We're significantly **American** and see significant opportunities outside of the United States," Porteba added. ”
The so-called "Big Seven" tech stocks, including Nvidia, Apple and Microsoft, contributed most of the boost to U.S. stock indexes. They have contributed 76% of the S&P 500's nearly 20% gain this year.
As the hype around AI intensifies, so does investor interest. But Portba explained that the hype has gone so far as to overshoot valuations that are above sustainable levels, leaving less popular markets undervalued.
And it's not just the global that is underrated. He added that the rest of the U.S. is also hovering outside the narrow tech spotlight, with the vast majority of U.S. companies being relatively cheap.
"It's impossible to estimate when the rubber band will shrink (or break)," Potter warned. However, the large amount of money pouring into such a limited number of ** strongly suggests that the range of investment opportunities is much broader than these seven**. ”