"David Royal, Chief Investment Officer at Thrivent, noted that the decline in AI investments has been orderly, stating, 'I think I agree with that ... it came down in a pretty orderly way.' This perspective highlights the absence of a dramatic market crash."
"Goldman Sachs' Peter Oppenheimer remarked that the technology sector has faced one of its worst periods of underperformance since the early 1970s, with the IT sector now trading at a forward P/E below other sectors, which was unthinkable just 18 months ago."
"The sell-off in AI stocks was not driven by irrational panic but by a rational repricing, as investors questioned the value derived from the significant capital expenditures by hyperscalers in the AI cloud market."
The anticipated crash in AI stocks has not occurred; instead, Wall Street has gradually reduced its investments in AI. Nvidia, a key player, has seen its stock stagnate despite growing earnings, leading to a decrease in its price-to-earnings multiple. Analysts from Goldman Sachs and Morgan Stanley note a significant underperformance in the technology sector compared to the global market. The sell-off reflects a rational repricing based on concerns over the returns from capital expenditures by major AI cloud providers.
Read at Fortune
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