As the Technology Stocks Club welcomes new members, the moniker for the Technology giants also needs to be updated. Once known as FANG, FAANG, FAMANG, and more recently as the 'Magnificent Seven', it has now become 'BATMMAAN', consisting of$Broadcom (AVGO.US)$、 $Apple (AAPL.US)$ 、$Tesla (TSLA.US)$、$Microsoft (MSFT.US)$、$Meta Platforms (META.US)$、 $Alphabet-A (GOOGL.US)$ 、$Amazon (AMZN.US)$and $NVIDIA (NVDA.US)$ Composition. These eight companies all have a Market Cap exceeding 1 trillion dollars.

In 2024, the average increase of BATMMAAN Stocks reached 66%, far exceeding 23%.$S&P 500 Index (.SPX.US)$Excluding these Technology giants, the S&P 500 Index only rose 12%.

With the new year beginning, it is a good time for investors to reassess the valuations of these stocks. Surprisingly, NVIDIA, which performed the best in 2024, may be the only company that has not yet been overvalued.

In 2024, NVIDIA's stock price soared by 171%, but according to Wall Street Analysts' predictions, NVIDIA is far from being overvalued. The key lies in the PEG ratio. This Indicator was proposed by legendary investor Peter Lynch, comparing a company's PE ratio with its expected earnings growth rate. A simple PE ratio can measure how "expensive" a stock price is relative to earnings, but more context is needed. Lynch believes that stocks with a PEG ratio below 1 may be undervalued, while those above 1 may be overvalued.

Based on 2025 earnings expectations, NVIDIA's PE ratio at the end of 2024 is 31, while analysts expect its 2025 earnings growth rate to be 52%. NVIDIA's PEG ratio is only 0.6, the lowest among BATMMAAN, indicating it still holds investment value.

On the other hand, Tesla's PEG ratio is as high as 3.2, the highest among BATMMAAN. Tesla's stock price is expected to rise by 63% in 2024, but its projected PE ratio for 2025 is 121, far exceeding the 37% earnings growth rate.

Broadcom is the second highest company in terms of increase within BATMMAAN, rising by 108% in 2024. Analysts forecast its 2025 earnings growth at 28%, with a PE ratio of 35 and a PEG ratio of 1.3, just next to NVIDIA, but still considered overvalued.

Microsoft is the worst-performing company among BATMMAAN in 2024, with a stock price increase of only 12%, below the S&P 500 Index. While some investors believe it is undervalued, analysts expect its earnings growth in 2025 to only be 13%, with a PEG ratio of 2.3, indicating that the valuation is not cheap.

The PEG ratios for Meta and Alphabet are 1.8 and 1.9, respectively, while Apple and Amazon have PEG ratios of 1.8 and 1.4, respectively.

Of course, this analysis is based on the earnings forecast for 2025, and the forecast itself may be wrong. Additionally, PEG is just one dimension of valuation, and stock prices are also influenced by non-quantitative factors such as investor sentiment. For example, the rise in Tesla's stock price is partly attributed to the close relationship between its CEO Elon Musk and the elected president Trump. If their relationship deteriorates or Trump's policies do not have a substantial impact on Tesla, investor sentiment may shift, and these changes cannot be captured by analytical models.

Finally, excessively high valuations do not necessarily perform poorly in the short term. From 1998 to 1999, even though many analysts warned that valuations were too high, the S&P 500 Index still rose by 21%. In the long term, valuation is an important tool for investors, but over-reliance may also lead to missing short-term gains.

In summary, amidst the current valuation wave among technology giants, NVIDIA may be an "unexpected delight" worth paying attention to.

Editor/new