Stock market at high prices fueled by AI and Trump, but potential trouble ahead due to earnings quality concerns

From Nasdaq: 2025-02-10 04:51:00

In 2023, Wall Street’s major indexes reached record highs, fueled by AI, Trump’s election, and strong corporate earnings. However, the stock market is historically pricey, with the S&P 500’s Shiller P/E at 38.37, signaling potential trouble ahead.

Some influential companies, like Tesla, derive over half of their income from non-innovative sources. Palantir and Apple also face challenges, with significant portions of their pre-tax income coming from unsustainable sources like interest income.

Investors need to be cautious as the stock market remains pricey. Quality profits are crucial, as earnings from unsustainable sources can mask underlying issues in influential companies. A second chance at lucrative opportunities may be on the horizon for savvy investors.



Read more at Nasdaq: The Stock Market Has an Earnings Quality Problem — and It Can’t Be Ignored Any Longer