FAST FIVE: Tech Bubble 2.0: Software Stock Valuations Are Back To Year 2000 Levels

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Investors are also  expecting support from a dovish Fed, and expect a cut at the July FOMC meeting.

Of course, while overall optimism may be explained, it is not justified, just like semiconductor stocks hitting all time high just over a month ago before crashing into a bear market as a result of the Huawei debacle.

Meanwhile, the storm clouds for tech are gathering, and as Goldman's chief equity strategist David Kostin writes, “politicians on both sides of the aisle have intensified their focus on antitrust issues.

The FTC and DoJ are reportedly launching investigations, the House Judiciary Committee has launched an antitrust probe of “big tech,” and several presidential candidates have outlined proposals to regulate large corporations.” Nonetheless, markets have reflected little concern.

Meanwhile, within Tech, Software stocks trade with a particularly large valuation premium; in fact one has to go all the way back to the (first) tech bubble to find greater investor euphoria as the median Software stock currently trades at 6x EV/Sales, nearly the highest multiple since the peak of the Tech Bubble, versus 2x for the Russell 3000 median.

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