Nvidia relief won't be enough to dispel tech-bubble angst

By Dhara Ranasinghe

LONDON (Reuters) -Markets whitethorn person weathered a cardinal Nvidia net trial but the quality of large tech to determination sentiment crossed markets connected a dime volition proceed to preoccupy investors arsenic lofty valuations persist.

AI darling Nvidia connected ​Wednesday amazed Wall Street with accelerating maturation aft respective quarters of slowing income and a fourth-quarter forecast that exceeded expectations.

While the alleviation ‌across satellite stocks was evident connected Thursday, adjacent Nvidia's upbeat results were improbable to dispel interest astir a autumn backmost to world for highly-valued tech stocks, amid lingering ‌concerns astir whether AI spending volition wage off.

Global stocks person dropped astir 3% this month, acceptable for their biggest monthly autumn since March, successful portion driven by concerns that a rally successful tech shares has gone excessively far, excessively fast.

"The concerns astir tech volition persist and each 4th we are apt to travel crossed the aforesaid concerns arsenic markets question the concentration," said Seema Shah, main planetary strategist astatine Principal Global Investors successful London.

"That ⁠story won’t spell away."

Shah said that portion ‌she was overweight U.S. stocks, she was besides wary of attraction risks and this was 1 crushed wherefore she was looking astatine European shares.

AI COMPANY RESULTS AS IMPORTANT AS DATA PRINTS

Investors and analysts accidental ‍as AI emerges arsenic a alleged mega-trend, net results specified arsenic those from Nvidia person go arsenic cardinal to shaping views connected the economical outlook arsenic monthly economical releases. Next large dates successful the calendar scope from upcoming tech net to signs of however wide AI is being adopted, justifying the spending.

Investors request ​to brace for a bumpy ride.

"Investors bash request to interest astir bubble risks," Mark Haefele, main concern serviceman astatine UBS Global ‌Wealth Management, told reporters connected a telephone astir the 2026 outlook connected Thursday.

The alleged "Magnificent Seven" - including Nvidia and Meta - person seen their stock prices soar, fuelling fears astir the standard of marketplace vulnerability to conscionable a fewer names.

Technology firms are among the banal market's large fallers successful caller days, though they are inactive good up connected the year.

The S&P 500 tech sector's guardant price/earnings ratio - a measurement of however overmuch a institution is worthy compared to aboriginal net - is astir 30 times, good ⁠above its 10-year mean of 22.2.

The AI stocks frenzy has drawn comparisons with ​the 1990s dotcom roar and bust, portion concerns were rising astir indebtedness taken connected ​by tech firms.

Nvidia produced $60 cardinal successful escaped currency travel implicit the past 12 months, David Trainer, CEO of concern probe steadfast New Constructs, said successful a note. To warrant its existent banal price, it would request to ‍produce $2.1 trillion successful yearly currency ⁠flows wrong 10 years, helium said.