SINGAPORE: Algebris Investments founder and chief executive Davide Serra warned that investors should cut back their exposure to the world’s top technology companies, citing the likelihood of a “significant correction.”
Speaking at the Bloomberg New Economy Forum in Singapore, Mr Serra said that this will be the case if revenues fail to support the scale of the AI push, adding that such earnings are “impossible by 2030” because of the level of public debt globally and the tax pressures governments will face, as reported by The Edge Singapore.
His comments came after policymakers and Wall Street executives recently voiced concerns about inflated tech stock valuations driven by enthusiasm for the artificial intelligence (AI) industry.
The Monetary Authority of Singapore (MAS) also voiced the same concerns in its annual Financial Stability Review (FSR) earlier this month, saying that “some equity markets are seeing relatively stretched valuations, particularly in the technology and AI segments.”
Algebris, which Mr Serra started in 2006 after working as a bank analyst, manages about €32.2 billion (S$48.5 billion) across credit, equity and private debt, based on an August factsheet.
He also said the US share of global markets is reaching its mathematical limit. He noted that “never in history” could a third of the world’s economy make up around 70% of global valuation, which he sees as a sign that markets are “peaking”.
Data from S&P Global Market Intelligence and MarketSurge, reviewed by Investor’s Business Daily, showed that almost 70 US-listed companies in the Global X Artificial Intelligence & Technology ETF have collectively lost about US$2.4 trillion (S$3.1 trillion) in market value since Oct 29.
The loss is roughly equal to Amazon’s market value and exceeds Meta’s US$1.5 trillion valuation.
Last month, GIC investment chief Bryan Yeo warned of a “hype bubble” in early-stage AI ventures as global funding for the sector reached a record US$192.7 billion. However, Nvidia chief Jensen Huang pushed back on this idea, saying the AI industry has hit a “quite extraordinary” turning point that supports the heavy spending taking place. /TISG
Featured image by Depositphotos (for illustration purposes only)
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