A sudden stumble in Nvidia stock has shaken Wall Street, sending the Nasdaq 100 down 1,4% in one of its sharpest drops since April.
The selloff highlights both the enduring power of the AI story and the fragility of markets built on a handful of names, says Nigel Green, chief executive of deVere Group, who says the pullback is not a rejection of AI’s future but a warning sign for investors who have piled too heavily into the megacaps driving indices to record highs.
“Nvidia is at the heart of one of the most profound technological shifts in decades. Belief in its long-term importance is justified,” says Nigel Green.
“But when one company falters and it reverberates through every corner of the market, it shows how dangerously narrow this rally has become.”
The Nasdaq 100 is now trading at 27 times expected earnings, underscoring valuations stretched to levels not seen since the dot-com boom. Wall Street’s reliance on the Magnificent Seven has powered the rally, but it has also concentrated risk to a degree rarely witnessed in modern markets.
“The AI revolution is not confined to one stock or even a small group of them,” says Green.
“Investors need to broaden their perspective and capture the wider AI ecosystem. This means looking at companies building data infrastructure, cybersecurity frameworks, cloud capacity, and industries embedding AI into healthcare, finance, and manufacturing.
“The future of AI is multi-dimensional, and portfolios need to reflect that reality,” he adds.
The ripple effects of Nvidia’s drop stretched beyond equities into crypto and emerging markets, reminding investors that concentrated trades in high-growth themes can quickly spill into other asset classes.
“Clearly, volatility is not a reason to walk away from AI,” Green adds.
“It’s a reason to engage with it more intelligently. Those who expand their positioning into the broader ecosystem, while ensuring they are not overexposed to a handful of megacaps, will be far better placed to capture the long-term rewards.”
He concludes: “AI will continue to drive productivity, innovation, and wealth creation across the global economy.
“But the winners will not be limited to a small cluster of companies. This is the moment for investors to widen the lens, strengthen diversification, and prepare for the next wave of growth.”