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The AI trade has become more selective as investors shift from broad enthusiasm to carefully evaluating individual tech companies’ fundamentals, risks, and actual results.

What caught our eyes this week

Who will the AI winners be?

The artificial intelligence trade has grown less monolithic in recent weeks. After Nvidia peaked on October 29, other large tech stocks fell by anywhere from 22% (Meta) to nothing at all (Alphabet). Most have since bounced back, but to varying degrees, with Microsoft and Nvidia still struggling to recover. We view this as a natural evolution of behavior for investors in the AI innovation cycle. Attention is turning away from broad enthusiasm toward a selective approach that tries to separate winners and losers. Those bets will change over time, but the market’s sensitivity to the risks of capital-intensive investments, debt funding, customer concentration, and stock valuations all reassure us that we aren’t in the late innings of an AI bubble. This market isn’t like the 1990s, where you could just add “.com” to your name and ride your stock price higher. Investors fell for that before—this time around, they’ll want to see results.

Stock price troughs and recoveries since October 29, 2025

CHART OF THE WEEK: Cerity Partners, Bloomberg as of 12/5/2025

Past performance does not guarantee future results.

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