"The jitters seen for big tech in the fourth quarter were largely centered around valuations and Michael Burry's spotlight on the depreciation timeframes being attached to major AI architecture spending. While those fears appear to have blown over for now, the perception that we will see a slowdown in the rate of growth for big tech means many are looking elsewhere for their growth narrative."
"The latest TSMC earnings do highlight a continuation of the outperformance seen for the rest of 2025, and thus there is a strong chance that earnings season brings a fresh bout of optimism as long as the tech gravy train continues to roll-on. However, the unpredictable nature of Donald Trump does mean that investors will seek to diversify away from the US too, with the weakness of the US dollar providing another incentive for international investors to look further afield in 2026."
"While the tech sector remains a key risk given its huge weighting and substantial gains over recent years, the AI revolution remains in its infancy. We are likely to see continued jitters, but the end of this boom will be hard to time. In all likeliness, any eventual crash will essentially serve to take the heat out the market, with investors swiftly bidding up the AI winners once again."
Stock market gains have broadened beyond big tech into wider US markets as investors seek alternative growth narratives. Valuation concerns and scrutiny of AI-related depreciation timelines reduced momentum for some leading tech names. The most obvious AI beneficiaries already exhibit strong momentum, prompting portfolio diversification into other sectors and regions. TSMC earnings indicate continued semiconductor outperformance and could fuel optimism during earnings season if AI-driven tech progress persists. Political uncertainty tied to Donald Trump and a weaker US dollar encourage international diversification. The tech sector’s size and past gains maintain systemic risk despite the AI revolution remaining in its infancy.
Read at London Business News | Londonlovesbusiness.com
Unable to calculate read time
Collection
[
|
...
]