Fidelity Says AI Rally Will Power Through Bubble Fears

​AI Stocks Take a Hit — but Optimists Aren’t Worried
AI stocks may be wobbling after a sharp pullback in semiconductors, but Fidelity International says the rally is far from over. Portfolio manager Joseph Zhang argues that booming AI spending and explosive user growth still outweigh concerns about stretched valuations.
His view: unless AI companies suddenly cut back on capital investment or user adoption slows meaningfully, the recent slide is just a bump — not the start of a bust.

“It’s Still Early in the Party”
Zhang believes investors are underestimating how young this cycle is. The sell-off, he says, reflects nerves rather than fundamentals. With companies like Amazon, Meta, and new AI ventures backed by Jeff Bezos pushing deeper into the space, enthusiasm remains high among long-term bulls.
Other large asset managers share the sentiment, noting that the market has barely scratched the surface of AI’s full capabilities.

Fundamentals Still Point Upward
For believers in the AI boom, the evidence still leans positive. Earnings across AI-linked companies continue to climb. Memory chip prices are rising. And the feared slowdown in data center spending hasn’t materialized.
Zhang also pushes back against critics who say AI firms are locked in circular, hype-driven investment loops. Building a global AI ecosystem, he argues, demands collaboration — and that collaboration won’t slow anytime soon.

But Confidence Faces Real Tests
Not everyone is convinced. Some managers warn that valuations have run too far, too fast. After a six-month surge, investors in both the U.S. and Asia are beginning to hedge their bets, especially ahead of Nvidia’s much-watched earnings release.
A prolonged sell-off, they argue, could force a painful reset. The AI boom isn’t immune to overexuberance — and tech history is full of examples.

Nvidia Remains the Market’s Big Catalyst
Even with all the debate, Nvidia still sits at the center of the AI universe. Its valuation may be lofty, but Fidelity insists the numbers make sense given its growth. Key suppliers like TSMC and Samsung look even cheaper.
Zhang expects that if Nvidia delivers solid results, investors will unwind their hedges — potentially sparking another sharp rebound in AI names.

Bottom Line
​Fidelity isn’t buying the bubble talk. As long as AI spending and usage keep climbing, the rally still has legs. Corrections, Zhang says, aren’t danger signs — they’re buying opportunities in a generational tech shift that’s only getting started.