This week's equity marketplace wobble, which saw a retreat successful U.S. AI-related stocks amid ongoing concerns implicit stretched valuations, has thrust contagion concerns into the spotlight for European investors.
Goldman Sachs CEO David Solomon warned this week of a "likely" 10-20% drawdown successful equity markets astatine immoderate constituent wrong the adjacent 2 years, portion the International Monetary Fund and the Bank of England person some sounded the alarm bells.
Bank of England Governor Andrew Bailey highlighted the possibilities of an AI bubble successful an interrogation with CNBC connected Thursday, noting that the "very affirmative productivity contribution" from exertion companies could beryllium offset by uncertainty astir aboriginal earning steams successful the sector.
"We person to beryllium precise alert to these risks," Bailey said.
Legrand is 1 of respective European companies which is benefitting from the AI boom. The French company, which sells products to Alphabet, Amazon and others to assistance chill servers, has seen its shares surge 37% this year, astir arsenic overmuch arsenic Nvidia.
Anders Danielsson, CEO of Swedish operation radical Skanska, which builds information centers and different AI infrastructure assets, shrugged disconnected concerns astir a slowdown.
"In the U.S. we person a precise beardown pipeline of information centers — we don't spot immoderate slowdown there," helium told CNBC. "We are moving with ample planetary customers and they are besides funny successful gathering information centers successful cardinal Europe, and successful the Nordics and the U.K. We haven't seen immoderate slowdown really."
Meanwhile Kiran Ganesh, multi-asset strategist astatine UBS, highlighted a notable deficiency of volatility, adding that the broader communicative remains positive.
"We've had a remarkably creaseless rally fixed the standard of concern that's taken place, fixed the uncertainty astir aboriginal currency flows, and fixed immoderate of those concerns astir valuation," Ganesh told CNBC's "Europe Early Edition" connected Friday.
"As we've gone done net season, I deliberation it's tenable to person expected immoderate volatility, but really erstwhile we look astatine the results, and they person been reassuring, we're inactive up implicit the people of net play and they person been beating expectations. So though immoderate volatility has been materializing this week, we deliberation that's to beryllium expected and the bigger representation inactive remains positive."
"Some large tech stocks are connected sale, and are presenting buying opportunities for investors, especially for investors who person missed retired connected the market's spot implicit the past 2 months," said Glen Smith, main concern serviceman astatine GDS Wealth Management.
Other investors person flagged attraction hazard successful U.S. equities, and advocator looking further afield.
Luca Paolini, main strategist astatine Pictet Asset Management, said stretched valuations mean the steadfast is neutral connected U.S. names. "Emerging markets are preferred, with diversified vulnerability crossed India, Brazil, and broader EM benefiting from AI-driven concern and monetary easing," Paolini said successful a marketplace commentary.
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