Global equity markets are extending their losing streak as AI-related stocks face mounting pressure, with Nvidia, Microsoft, and Palantir leading the decline. But seasoned investors are calling this a sector-specific correction rather than the start of a broader bear market, viewing the pullback as a potential buying opportunity ahead of Nvidia's critical earnings report.
The global sell-off that's been hammering equity markets for days isn't showing signs of letting up, but the Street's most influential voices are pushing back against panic. What we're seeing isn't the AI bubble bursting - it's a long-overdue reality check on valuations that got ahead of themselves.
Nvidia shares have been leading the carnage alongside other AI darlings like Palantir and Microsoft, dragging down markets from London to Tokyo. The pan-European Stoxx 600 hit its lowest level in a month Tuesday, while Asian markets continued their slide into Wednesday's trading session.
But Emma Wall, head of investment analysis at Hargreaves Lansdown, is telling investors to keep their nerve. "We do think this is an AI specific pullback. We don't think this is the beginning of the bear market," Wall told CNBC's Squawk Box Europe. Her view reflects growing consensus among institutional investors that this correction was inevitable after the extraordinary run-up in AI stocks.
The numbers tell that story. Even after this week's losses, most AI investors are still sitting on substantial gains from the past year's rally. Wall sees this as a portfolio rebalancing opportunity rather than a reason to flee the sector entirely.
Morgan Stanley's Mike Wilson, one of Wall Street's most closely watched strategists, is equally measured in his assessment. The chief U.S. equity strategist told CNBC that markets have been in correction mode for six weeks now, but emphasized "it's not the end of the AI cycle." Wilson's calling this the "middle-inning" of what he expects to be an ongoing adjustment period.
The timing couldn't be more critical. Nvidia - widely considered the bellwether for the entire AI ecosystem - reports third-quarter earnings after Wednesday's closing bell. The chip giant's results won't just move its own stock; they'll likely determine whether this correction deepens or markets find their footing again.
"Whatever happens tonight is, if it is a blip, is a pullback, it's probably a dip to be bought," Wilson said, though he acknowledged we're "in the midst of somewhat of a correction right now." His confidence stems from the fundamental spending dynamics still playing out in AI infrastructure.
