In an interview on Asharq Bloomberg Radio’s “Swalif Tech” program with Fawzan Al-Thubaiti, market expert Abdulmajeed Al-Abdullah explained that the recent wave of outflows from technology stocks does not necessarily signal a “bubble” in the artificial intelligence sector.
Interview Highlights
Not a Bubble Yet
Tech company earnings are still beating expectations, so it is too early to call the situation a bubble. The real concerns center on high valuations and inflated price-to-earnings multiples at some companies.
Why Funds Are Exiting
Funds exit a position entirely only when a company has structural problems. Gradual exits happen when high profit targets are reached (such as 300-400%), with bond hedging used to protect gains.
Where Is the Money Going?
A large share of the money is moving into defensive sectors and safe havens, or staying in cash while waiting for better opportunities, especially amid geopolitical tensions and concerns about persistent inflation.
Interest Rate Pressure
The tech sector is sensitive to interest rates. AI infrastructure requires massive funding that could reach $700 billion, and elevated rates put pressure on that financing and on turning investments into actual profits.
Advice for Individual Investors
Don’t sell just to copy the funds. The decision depends on the investor’s plan, financial position and entry timing. Price corrections are healthy, diversification is essential, and the real risk is buying into overvalued companies at random without studying their numbers.
Bottom Line
Markets are currently accepting higher earnings multiples for fast-growing companies, but persistently high interest rates and elevated valuations are pushing “smart money” to rebalance portfolios cautiously.
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