The relentless rally in artificial intelligence equities is encountering resistance from cautious portfolio managers who are beginning to question the sustainability of valuations in the most crowded corners of the trade.
While the AI theme has continued to overshadow the broader second-quarter earnings season, capturing the bulk of market attention and capital, a growing segment of investors is looking for areas where the hype has not yet fully priced in future growth.
Ortay Gelen, a portfolio manager at Dortmund-based asset manager Axia Asset Management, highlighted this shift in sentiment, noting a particular wariness toward memory chip stocks.
He described the current environment in the memory sector as the loudest part of the party, suggesting that the exuberance surrounding names like Micron may be reaching a peak.
This caution reflects a broader strategy among some European fund managers to avoid chasing momentum in sectors that have already seen parabolic runs.
The AI trade has retained a firm grip on market sentiment this week, effectively eclipsing what has otherwise been a strong start to the earnings season.