Tech stocks might be catching their breath rather than gasping for air. Despite a brutal week that saw the Nasdaq shed 3% - its worst performance since April - market strategists are telling investors not to panic yet. The reason? Earnings have been "reassuring" even as AI valuations reach dizzying heights, suggesting this pullback could be temporary rather than the start of a major correction.
The tech sector just delivered its harshest reality check in months, but Wall Street's top strategists aren't ready to call time on the AI-fueled rally just yet. After the Nasdaq tumbled 3% last week - its steepest decline since the brutal April selloff that erased 10% in five trading days - investors are wondering if the bubble has finally burst on artificial intelligence stocks.
Not so fast, says Kiran Ganesh, multi-asset strategist at UBS. Speaking to CNBC, Ganesh pointed to earnings as the key differentiator between this pullback and a genuine market reckoning. "Earnings have been reassuring despite worries about tech stocks' high valuations," he explained, suggesting the current downdraft might be more seasonal squall than structural storm.
The timing couldn't be more ironic. November historically ranks as the S&P 500's best month, averaging 1.8% gains according to the Stock Trader's Almanac. Instead, investors watched both the S&P 500 and Dow Jones Industrial Average shed more than 1% each as concerns about AI valuations finally caught up with market euphoria.
The concentration risk is undeniable. "You've got trillions of dollars tied up in seven stocks, for example," DBS CEO Tan Su Shan told CNBC this week. "So it's inevitable, with that kind of concentration, that there will be a worry about, 'You know, when will this bubble burst?'" Southeast Asia's largest bank chief isn't alone in his concerns.
Goldman Sachs CEO David Solomon delivered an even starker warning at the Global Financial Leaders' Investment Summit in Hong Kong. "It's likely there'll be a 10 to 20% drawdown in equity markets sometime in the next 12 to 24 months," Solomon predicted, though he stopped short of pinpointing AI stocks as the specific catalyst.
But here's where the current selloff differs from previous tech crashes. Unlike the dot-com bubble of 2000 or even the growth stock massacre of 2022, today's AI leaders are actually printing money. Microsoft, , and aren't just promising future profits - they're delivering them quarter after quarter, often beating already-elevated expectations.
