Investment strategist Nigel Green explains why this week marks AI’s defining moment, as investors separate companies delivering returns from those relying on promises.
What’s happening: AI and technology markets are undergoing a global reset as investors confront the limits of a two-year rally built on optimism rather than proven returns.
Why this matters: Companies demonstrating control over AI investment whilst enhancing margins will lead the next phase, whilst those relying on long-dated promises face swift market punishment.
A fundamental shift is unfolding across global AI and technology markets as investors move beyond enthusiasm towards rigorous scrutiny of returns.
The warning from Nigel Green, chief executive of deVere Group, follows significant market volatility, with the Nikkei sliding 3% and major US benchmarks closing firmly lower, signalling that optimism alone cannot support valuations dependent on flawless execution.
“AI has been the engine of global markets for two years, but the phase of unchecked optimism is giving way to a sharper focus on resilience,” Green says.
“Investors want proof that spending translates into dependable earnings growth. The companies that deliver that clarity will lead the next stage.”
The market’s repricing reflects concerns building throughout the latest earnings cycle. Tech giants produced divergent results, underscoring the sector’s split between firms converting AI infrastructure into immediate returns and those relying on longer-dated promises.
Alphabet and Amazon strengthened their reputations as disciplined operators, whilst Meta and Microsoft encountered swift pushback as higher capital commitments unsettled shareholders.
Market discipline returns
Nvidia will report its fiscal third-quarter earnings after the bell on Wednesday, 19 November, with analysts anticipating adjusted earnings per share of $1.26 on revenue of $55.2 billion, representing year-on-year increases of 55% and 57% respectively.
The AI chip manufacturer’s report arrives at a precarious moment. The company’s market capitalisation briefly eclipsed $5 trillion last month, pushing valuations into territory where any deviation could alter sentiment rapidly.
“Investors are assessing strategy in real time,” the deVere CEO says.
“They’re rewarding companies that show control over investment and demonstrate that AI adoption is enhancing margins. The market is far less forgiving when spending outpaces revenue potential.”
The broader investment landscape reflects this shift. Whilst AI sector funding approached 2024’s full-year total within the first six months of 2025, scrutiny has intensified around business models and paths to profitability.
Nvidia’s crucial test
Nvidia CEO Jensen Huang revealed in October that his company has $500 billion in orders, in 2025 and 2026 combined, a figure that suggests meaningfully higher revenue than previously expected.
However, expectations have pushed the valuation into extraordinary territory. The company’s Blackwell platform, sovereign AI contracts and the pace of hyperscaler demand will influence how investors judge AI spending durability through next year.
“The bar set for Nvidia is extraordinary,” Green notes.
“The reaction will not hinge on scale alone. Investors want to see whether profitability is expanding in line with investment. This is the benchmark for the entire AI complex.”
Options traders expect a 6% to 8% move in Nvidia stock immediately after the results are announced, reflecting the significance markets attach to the report.
Policy reshapes strategy
Policy shifts under President Donald Trump add another layer of scrutiny. Washington’s export controls continue to reshape access to advanced computing in China, whilst domestic priorities around supply-chain security and technological self-sufficiency influence capital-allocation strategies across the industry.
These dynamics make Nvidia’s forward guidance especially significant, as it will shape expectations for global AI investment through 2026.
“The policy environment is evolving quickly,” Green says.
“Companies operating at the core of advanced computing must show how they adapt. Investors will study every signal that reveals how firms intend to align growth plans with geopolitical realities.”
The recent rout in global equities reveals how sensitive markets have become to any sign of overstretch. Wall Street’s pullback, led by renewed pressure on AI-linked names, highlights the fragility beneath headline gains.
Green emphasises that discipline will shape outcomes next year. “AI remains transformational, but the market is changing fast. Selectivity has moved from advantage to necessity,” he says.
“Investors who understand the distinction between scale and sustainable returns will be best-positioned for the opportunities emerging on the other side of this adjustment.”
The investment environment for AI and technology companies continues to evolve as businesses balance innovation with proven returns, marking a maturation phase for the sector after two years of unprecedented growth.
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