This week’s stock market turmoil has put a spotlight on contagion concerns for European investors, with U.S. AI stocks falling amid continued concerns about soaring valuations.
goldman sachs CEO David Solomon warned this week that the stock market is “likely” to fall by 10-20% at some point within the next two years, with the International Monetary Fund and the Bank of England also sounding the alarm.
Bank of England Governor Andrew Bailey highlighted the possibility of an AI bubble in an interview with CNBC on Thursday, noting that the “very positive productivity contribution” from technology companies could be offset by uncertainty over the sector’s future revenue sources.
“We need to pay close attention to these risks,” Bailey said.
Legrand is one of several European companies benefiting from the AI boom. French company that sells products to alphabet, Amazon Other products that help cool servers have seen their shares soar 37% this year, about the same level. Nvidia.
Anders Danielsson, CEO of Skanska, a Swedish construction group that builds data centers and other AI infrastructure assets, dismissed concerns about an economic slowdown.
“The U.S. has a very strong data center pipeline and we don’t see any slowdown there,” he told CNBC. “We are working with large customers overseas and they are also interested in building data centers in Central Europe, Northern Europe and the UK. We are not really seeing a slowdown.”
Meanwhile, multi-asset strategist Kiran Ganesh said, UBShighlighted the notable lack of volatility, adding that the broader narrative remains positive.
“Given the size of the investments that have been made, the uncertainty of future cash flows, and some of the valuation concerns, we’ve had a surprisingly smooth rally,” Ganesh told CNBC’s “Europe Early Edition” on Friday.
“I think it’s natural to expect some volatility as we’re in earnings season, but actually looking at the earnings gave us some reassurance and they’re still up during earnings season and are outperforming our expectations. So while we’re seeing some volatility manifesting itself this week, that’s to be expected and we think the overall picture is still positive.”
“Some of the big tech stocks are selling, giving investors, especially those who have missed out on the strength of the market over the past two months, a buying opportunity,” said Glenn Smith, chief investment officer at GDS Wealth Management.
Other investors argue for looking further afield, pointing to concentration risks in U.S. stocks.
Luca Paolini, chief strategist at Pictet Asset Management, said the inflated valuation meant the company was neutral on the U.S. name. “Emerging markets are favored, with exposure diversified across India, Brazil and broader emerging markets, benefiting from AI-driven investments and monetary easing,” Paolini said in market commentary.
