AI Stocks Soar to Lofty Valuations, Raising Risk of Pullbacks
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Arm Holdings, Cloudflare, and Super Micro Computer are high-flying AI stocks that have seen considerable gains recently.
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However, these stocks now have lofty valuations and could see significant pullbacks if the market turns against high-growth tech stocks.
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Arm Holdings has a forward P/E of nearly 110 and a P/S ratio of 45, leaving little room for error.
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Cloudflare has a P/S ratio of 25, high for a company not yet profitable under GAAP.
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Super Micro Computer has seen massive 750% yearly gains, with a P/S ratio now 5x higher than a year ago, increasing chances of a pullback.