U.S. Stocks Are Overvalued, But Not In A Bubble | Professor Aswath Damodaran on Equity Valuations, AI Data Center Boom, and “Big Market Delusions”

The valuation of the stock market, particularly in light of the AI boom, is examined with Aswath Damodaran, Finance Professor at the New York University Stern School of Business. The conversation highlights the "big market delusion" inherent in emerging technologies like AI, where overconfidence leads to overvaluation, and too many businesses chase the same opportunity. While AI architecture companies like Nvidia are currently benefiting, the real delusion lies in LLMs and related products, which are likely overvalued due to uncertain revenue streams. The discussion covers potential corrections, the role of network effects, and the importance of cash flow over earnings in valuation, advocating for dividends plus buybacks as a key metric.