New Delhi, Oct 17 (IANS) Consensus earnings growth for AI‑related stocks in the MSCI AC World Index is expected to plummet from nearly 100 per cent in 2026 to 30 per cent in 2027 and about 22 per cent in 2028, a new report has said, as chipmakers suffered sharp losses this week.
“It has become time to diversify beyond AI,” the report from investment bank Jefferies said as global equity markets saw a sharp selloff this week as investors grew increasingly sceptical about the sustainability of the AI trade and mounting debt concerns.
However, the investment bank continues to hold companies that supply the infrastructure behind AI, but avoids companies directly spending money in the ongoing AI capital expenditure race.
The report mentioned valuation as a key concern because on an equal‑weighted basis, global AI stocks trade at about 23 times forward price‑to‑earnings, nearly double the 13 times multiple for non‑AI stocks.
Higher PE ratio means investors pay a significantly higher premium for AI-linked companies, even as their earnings growth is expected to dip over the next two years.
The shift away from AI is already visible in emerging markets, where AI‑linked stocks have dipped after an exceptional rally. The report noted the group gained 81 per cent in one year through June but has seen returns slow in the second half of 2026 as investors rotated into other sectors.
The report added that its underweight position in South Korea had recently shifted to neutral following the market’s underperformance.
Though further gains are possible in chip stocks if AI-related spending remains strong, much of the easy money in semiconductor stocks has already been made, it said, adding that as these companies are largely concentrated in emerging market benchmarks, fund managers can hardly avoid them.
TSMC, Samsung Electronics and SK Hynix collectively constitute 28.5 percent of the MSCI Emerging Markets benchmark.
Another report earlier this month said that AI‑led earnings concentration in Taiwan and Korea drew some emerging market funds away from fairly valued Indian stocks, creating a rotation that affected foreign investor flows into India.
—IANS
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