The new week has brought a marked cooling of sentiment in the technology market, with the US100 index falling by 1.7 per cent at today’s opening. This sell-off is directly linked to a surprising consensus amongst the tech giants, who are unanimously warning against the overly rapid development of artificial intelligence. Dario Amodei, CEO of Anthropic, recently called for a drastic slowdown in the pace of AI model development and for these models to be closely monitored in order to minimise the critical risks posed by super-intelligent computer systems. Interestingly, his stance was almost immediately backed by Elon Musk and Sam Altman of OpenAI, who openly acknowledged the need to set new boundaries and improve the management of global technological security. This sudden shift towards industry-wide caution has deeply concerned market players, particularly as it was followed by concrete business decisions. Sam Altman officially confirmed that OpenAI will ultimately not file for an initial public offering (IPO) in 2026, deeming the current moment ill-timed due to the growing significance of AI model safety concerns. For Wall Street, this marks a painful postponement of one of the most eagerly anticipated stock market debuts, which has directly contributed to today’s sell-off on the index.
Donald Trump strongly disagrees with the technology sector’s cautious approach and is publicly seeking to debunk any narratives about virtual threats. The former president believes that the industry’s fears are greatly exaggerated, and that calls for regulation are the result of negative forces scaremongering with scenarios that are unlikely ever to materialise. Above all, however, Trump fears the loss of American dominance to China, a rapidly rising technological power. In his recent statements, he emphasises that the United States still leads China in the field of artificial intelligence and adds explicitly that whoever ultimately wins the AI race wins absolutely everything. His position becomes fully understandable when we look at Beijing’s current geopolitical offensive. President Xi Jinping has just announced at the BRICS summit that it is China that will take the global lead in supporting the development of artificial intelligence across the entire group of developing nations. Imposing administrative restrictions on American corporations at this crucial juncture could irrevocably hand the market advantage to powerful Asian competitors.
Despite the huge media hype and a clearly weaker start to the week, the fundamental picture for the main technology index does not look quite so bleak. Looking at current valuations with a cool head, one can see that the US100 is trading at exceptionally attractive, even low levels relative to its averages over recent months. The price-to-earnings ratio forecast for the Nasdaq 100 has fallen noticeably below its long-term 126-day average. Currently, this ratio is hovering around 22.8, which brings it right up against the lower band of the first standard deviation. Such a sharp compression in valuations suggests that the stock market may already have largely digested and priced in the negative scenarios associated with the slowdown in artificial intelligence development and cancelled IPOs. For investors taking a slightly broader view, the current, sharply reduced index levels may in fact present an excellent opportunity to seek out favourable investment opportunities. Source: XTB Research
The volume profile plotted on the US100 since the start of the year indicates that three zones of elevated volume have formed. The latest consolidation within the uptrend is being tested on the downside today, and if a break below occurs, this could signal a willingness on the part of sellers to push the price down, potentially from the next volume cluster, which may lie in the area of the recent lows following the sharp declines we saw in early August. At this stage, however, the long-term uptrend may not yet appear sufficiently compromised to suggest a risk of deeper declines, but everything will depend on incoming media headlines. Source: xStation
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