Global stocks slump exposes gap between AI promise and profit

Global stocks extending losses underscores that a reality check on AI and tech valuations is brewing, warns the CEO of one of the world’s largest independent financial advisory organizations.The warning comes as global equities declined sharply on Wednesday as investor confidence wavered over overstretched AI and tech valuations, with Asian markets posting their steepest falls in months, European futures pointing lower, and risk-sensitive currencies losing ground. Gold climbed as investors sought safety, while Bitcoin briefly fell below $100 000 before recovering.Nigel Green, CEO of deVere Group, said the sharp reversal across global markets shows investors are beginning to question whether record-breaking AI and tech valuations can be justified by profits.“AI and tech valuations have been expanding faster than earnings for some time,” said Nigel Green. “The innovation is genuine, but the profitability still has to prove itself. Markets are now asking for evidence rather than expectation.”He says this latest selloff reflects a growing recognition that the powerful rally led by a handful of mega-cap names had become increasingly fragile. “When such a small group of companies carries so much market weight, any loss of confidence in them can trigger outsized reactions,” he noted.“What we’re witnessing is not panic, but price discovery after months of excessive momentum.”Asian markets led the retreat, with Japan’s Nikkei and South Korea’s Kospi suffering heavy losses and SoftBank plunging as much as 14% amid renewed doubts about valuations linked to AI and tech investment. Futures in Europe and the US also weakened, signalling further pressure ahead for major indices that have been climbing on belief rather than balance sheets.Nigel Green said the correction, while unsettling, is a necessary phase for sustainable growth. “A correction of this scale reintroduces discipline to markets,” he expained. “It forces investors to distinguish between companies driving real-world productivity and those trading only on potential.”He explained that deVere has repeatedly highlighted the widening gap between technological innovation and corporate profitability. “The AI and tech ecosystem has been building a circular economy — chipmakers selling to hyperscalers, hyperscalers selling to software developers, and software developers selling to one another,” he said. “This creates the illusion of relentless growth, but it’s largely demand recycling within the same ecosystem. Until that demand produces measurable profits, valuations will remain vulnerable.”Gold’s rebound and the yen’s strength highlight investors’ growing preference for defensive assets. The dollar advanced, reflecting a global shift to safety. Bitcoin’s temporary fall below six figures, meanwhile, shows that speculative assets are not immune from the same reassessment of risk.The deVere CEO said this phase, though turbulent, offers long-term opportunity. “Markets are rebalancing after a period of euphoria,” he said. “Those who remain invested intelligently will find that this is when real value starts to emerge. “The key is not to retreat from innovation but to focus on companies demonstrating tangible productivity gains.”He points to the sectors where AI and tech are likely to deliver measurable results. “Energy efficiency, logistics, healthcare, and financial services are already seeing early signs of transformation,” he said. “These are areas where AI and tech’s potential is turning into genuine productivity, and that’s where long-term investors should be looking.”While he expects further volatility, Nigel Green stresses that this marks evolution, not decline. “Every major technological era — the internet, mobile computing, renewable energy — has experienced corrections that reset expectations.:Each time, the strongest players emerge more profitable and more credible.”He concludes: “AI and tech remain the defining forces of this decade, but valuations must align with profits. This correction is the start of that alignment. “Investors should stay engaged, stay selective, and focus on where the promise of technology meets proof of performance.”

Global stocks slump exposes gap between AI promise and profit

Comments

Namibian Sun 2025-11-06

Please login to leave a comment

Global stocks slump exposes gap between AI promise and profit

Comments

Namibian Sun 2025-11-06

Please login to leave a comment

Subscription Required to Access Content ×

Login

Subscription Required to Access Content