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If the stock market’s artificial intelligence boom turns out to be a bubble, it could very well be the most widely anticipated collapse in market history. Rajiv Jain has three decades of money management experience and co-founded GQG Partners, which offers a raft of Gold-rated funds as part of its $167 billion under management. He thinks the AI trade will turn out to be much worse and more widespread than the dot-com collapse of 1999. Leslie Norton spoke with Jain, who explained why he thinks we’re in the midst of a massive bubble, what could cause it to pop, and where the waves are most likely to hit. Even if you disagree, this is a must-read.
For those who say this isn’t a bubble, Exhibit A is Nvidia’s latest monster quarter for earnings. Morningstar’s Brian Colello says the firm’s outlook doesn’t point to a near-term collapse of the AI gravy train. However, he’s keeping an eye on the medium term, as funding concerns and energy buildouts could be an issue.
With Nvidia’s earnings release, most of the big tech companies have reported their third-quarter results, and the verdict from investors is decidedly mixed. We look at which tech stocks were winners after earnings, and which ones took a dive.
The AI tide has not lifted all tech boats. In fact, many software stocks have taken a beating because of worries that AI will undermine their business models. Sarah Hansen explores what’s been driving this selloff, and checks in with Morningstar senior equity research analyst Dan Romanoff on whether software stocks are now a buy.
Of course, there is a world outside AI, and this past week brought the first official economic data since the government shutdown, in the form of the September jobs report. On the surface, the hiring news was positive for the economy, but as we explain, you shouldn’t celebrate the economy regaining its footing just yet.
Still, the jobs data only added to expectations that Federal Reserve won’t be cutting interest rates in December. That, coupled with the growing caution around the AI trade made for a rough week in stocks, with the market losing nearly 2%, led by an almost 5% drop in tech. As one stock market strategist says, sentiment is looking “brittle.”
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