Elon Musk isn't known for his brevity. Tesla's (TSLA -2.00%) CEO has a bit of a reputation for expressing his views at length on a wide range of topics.

But when it comes to opining on the huge gains Microsoft (MSFT 1.75%) and Nvidia (NVDA 3.58%) saw in their stock prices on Tuesday, the multibillionaire got right to the point. Musk had just two words to describe the two companies' combined $175 billion jump in market value.

Musk's succinct analysis

Widely followed financial blogger ZeroHedge tweeted on Tuesday about the surge in share prices for Microsoft and Nvidia. Musk replied with his thoughts on the subject shortly afterward:

The times were even crazier during intraday trading on Tuesday. At one point, Microsoft and Nvidia together added another $192 billion in market cap.

Microsoft stock jumped as much as 6% after the company announced that it would charge $30 per month for Copilot. The generative artificial intelligence (AI) assistant is integrated throughout the Microsoft 365 platform, which includes Access, Excel, Outlook, PowerPoint, Publisher, Teams, and Word.

Nvidia's share price rose as much as 3%. Its catalyst was an upgrade by Citi analyst Atif Malik. Citi raised its price target for Nvidia to $520 from $420. Malik said that the AI stock could soar as high as $600 a share.

By market close on Tuesday, both Microsoft and Nvidia had given up some of their gains. The two companies ended the day with market cap increases of $102 billion and $26 billion, respectively. 

Pick your definition

Merriam-Webster's dictionary gives one definition of "crazy" as "very excited." That certainly describes Microsoft's and Nvidia's shareholders. Microsoft's stock is up close to 50% year to date, while Nvidia stock has skyrocketed more than 220%.

But another definition of crazy is "not sensible or logical." I would argue Musk had this definition in mind with his tweet about the two stocks' ginormous gains -- especially with respect to Nvidia.

After its sizzling performance so far this year, Nvidia's forward price-to-earnings ratio stands at 62.5. The stock trades at more than 20 times its projected 2025 sales. Valuation expert Aswath Damodaran said he thought that Nvidia was way overpriced nearly a month ago when the company's shares were nearly 13% below the current level.

Microsoft's valuation is also high, although not to the extent that Nvidia's is. Shares of the Seattle-based tech giant currently trade at a forward earnings multiple of nearly 32.5. 

Crazy times, indeed

Musk didn't mention Tesla's valuation this week. But he tweeted back in May 2020 that the stock's price was "too high." Tesla's share price has now jumped more than 6x after a year-to-date gain of close to 140%. Tesla's forward price-to-earnings ratio of 85.5 is even higher than Nvidia's. 

Warren Buffett's mentor, Benjamin Graham, once said, "In the short run, the market is a voting machine, but in the long run, it is a weighing machine."

We're seeing investors vote right now. But eventually, the underlying business fundamentals of companies will be weighed. And stock valuations will matter when that happens.

It could take a while, though, if history is any guide. Former Federal Reserve chairman Alan Greenspan warned about "irrational exuberance" about stocks in 1996. The dot-com bubble didn't burst until four years later.

However, Greenspan was correct back then. Elon Musk is probably correct now. These are crazy times, indeed.