What a week for AI technology stocks! On Monday, circa 17%, $600 billion, was wiped off Nvidia with many other specific stocks falling by up to 40% in one day. The Nasdaq, which is broader based than just AI, fell by circa 3% but has recovered much of its poise.
In our communication this week, we evaluate what happened, and why, and give guidance on the likely pathway for AI and associated stocks.
We will also delve into what this means for the wider stock market. Diversification is going to play an even bigger part across portfolios, but I often ask the question “when is diversification, dilution?”
Thematic funds have performed really well since Trump won the election, which has led to a bullish sentiment for growth stocks. However, Trump’s rhetoric about renewable energy sources has been very damming. Perhaps it’s easy to be damming when you are self-sufficient in energy, like the US!
We reached out to LGT Wealth Management’s Sustainable team who remain upbeat despite the tide of negativity on the back of net zero targets being pushed back and weaker renewable energy commitments, much of it influenced by difficult financial conditions. We’ll share their views and perspectives for the future.
We also had our Quarterly Asset Allocation Investment Meeting this week, which was attended by Legal & General Investment Management. Again, we’ll share their views on the outlook for the investment arena.
On our agenda today:
- Is it the end?
- Diversification pays off
- The time to ditch ESG holdings?
- What is the outlook for the next few months?
- Corporate credit doesn’t look attractive
- Gold reaches a record-high
- A word or two on Crypto
- Summary
Is it the end?
This week’s news about a Chinese AI company making rapid progress with just a fraction of the capital investment that has been seen by US corporates, spooked that sector of the market. This has led some to suggest that this is the end of the party for AI stocks whereas others believe that potentially lower capital requirements are good for the sector.
DeepSeek claims that its artificial intelligence model requires far fewer chips and is also cheaper to run than larger systems. Interestingly, it was announced on Bloomberg this morning that DeepSeek is being probed by the FBI and White House.
Continues…
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Risk warning
Please Note: This communication should not be read as giving specific advice regarding your personal circumstances. This would only be given following detailed assessment of your individual needs. The value of investments may fall as well as rise; you may get back less than invested. Past performance is not necessarily a guide to future returns.
