While continued investment in AI will continue to fuel the US economy in 2026, the valuations of major tech companies are a concern for many equity investors, says Mark Dowding, Chief Investment Officer at RBC BlueBay.
“The belief that ultimately only a small number of winners will remain means there is a strong urge not to be left behind. The rush to invest money is a strong macroeconomic tailwind for the US economy as a whole.”
In addition, the economy will benefit from lower interest rates, lower taxes, and deregulation. Together, according to Dowding, this can help maintain the bull market mentality.
At least for the time being, because he also sees that the valuation of AI stocks is worrying many traditional fundamental investors. "Nvidia's valuation alone now easily exceeds Japan's GDP and represents 13% of the Nasdaq Composite."
Nvidia's $5 trillion market capitalization is so astronomical that it's almost equivalent to the number of miles traveled in a light-year, according to the CIO.
The company's continued growth is truly a different story. But when you travel at the speed of light, you know it's impossible to go any faster, and you dread the moment when the AI boom is over. Yet, that doesn't seem to be the case any time soon... or at least, that's what the bulls hope.
