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The market (^GSPC, ^IXIC, ^DJI) experienced significant volatility throughout the start of 2025, echoing similar challenges from this time last year. Now, the market environment presents a unique challenge for investors, tied to the ebb and flow in the artificial intelligence (AI) trade.
Bullseye American Ingenuity Fund portfolio manager Adam Johnson joins Morning Brief hosts Brad Smith and Seana Smith to discuss current valuations, emphasizing that investors should assess the price they pay for growth.
"You can buy the S&P 500m it's trading 21 times earnings and you get 12% growth. Ok, fair point, that's our, sort of, benchmark," Johnson says. "Well, you could go out and buy Nvidia (NVDA), [which] trades at 30 times. You say 'oh that's a lot more than 21.' Yeah, but it's growing at 60%."
Johnson also comments on the overall market growth, noting that despite some downward revisions, "the growth that companies put up in the fourth quarter was 12%, actually 12.3%, and profit margins were 13%." Additionally, he encourages investors to stay focused on the fundamentals and not overthink the market.
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"Just take it at face value. Don't overthink it. Market down 10% on the heels of 12.3% growth, with 13% growth likely for the next reporting season. Buy it," Johnson encourages.
To watch more expert insights and analysis on the latest market action, check out more Morning Brief here.
This post was written by Josh Lynch