A Deutsche Bank survey warns that investors are getting jittery about tech stocks, while Citi offers a play that gets exposure to the sector.
Deutsche Bank’s quarterly investor survey finds a rising concern that technology stocks may already be in bubble territory, reports The Wall Street Journal.
On a scale from 1 to 10, with 10 denoting an “extreme bubble,” institutional investors rated tech a 7.4. The figure is higher than last year, though still below 2021, when near-zero interest rates propelled valuations. The survey, based on 280 global respondents polled last week, highlights a widening unease over whether the gains are sustainable.
At the same time, Stuart Kaiser, Citi’s head of Equity Trading Strategy, says the bank is firmly behind one AI-related theme despite stretched valuations.
“I think AI power [generation] and that trade is probably the thing we have the most confidence in, frankly, from a Sharpe ratio perspective. To be fair, though, yeah, I mean, there is a lot priced in right now. People are, I don’t want to say over their skis, but it’s a pretty aggressive trade.”
The AI power generation play is a bet that soaring energy demand from AI data centers will drive outsized gains for utilities, power producers, and grid infrastructure providers.
Citi points to Oracle’s latest earnings as an example, where strong revenue forecasts were offset by doubts over chip supply and energy availability.
“They’re not going to be able to find the chips and the energy to actually get there. So it’s tough.”
But the bank argues the narrative is still in its early stages.
“The tactical valuation might look high. But if you believe that narrative, then you’re probably earlier innings in that trade than you previously thought. So AI power gen is a theme where we’re still pretty, pretty strongly behind.”
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