Today's growth stock rally is different from the tech bubble of the 1990s.

Analysts at Goldman Sachs said in their weekly US Kickstart Note on Monday that the current rally in growth stocks is unlike the tech bubble seen in the 1990s.

The investment bank said the share of market capitalization concentrated in stocks with very high valuations has recently risen to levels similar to those reached during the euphoria of 2021.

“Stocks with an EV/sales ratio of over 10x currently account for 24% of U.S. stock market capitalization, compared to 28% in 2021 and 35% during the tech bubble of the late 1990s,” they wrote. writing.

According to the company, today's extreme The prevalence of valuations appears to be much less widespread than it was in 2021, he said.

“The rise in WACC means that valuations for small-cap, unprofitable growth stocks are unlikely to return to 2021 highs,” Goldman added. “Unlike the widespread 'growth at all costs' of 2021, investors are paying higher valuations primarily for the largest growth stocks in the index.

“This movement more closely resembles a tech bubble than 2021. However, in contrast to the late 90s, we believe Magnificent 7's valuation is now supported by fundamentals.”