# AI hopes masked weaker tech fundamentals as investors turn more selective on pricing

By Riza Dagoc

Canonical URL: https://www.tokenpost.com/news/investing/50175
Published: 2026-11-06T15:20:37.000Z
Updated: 2026-11-06T15:20:37.000Z
Section: Investing

> Rich Bernstein said heavy risk-taking and weaker tech fundamentals compounded the selloff, with AI optimism giving way to closer scrutiny of valuations and financing terms.

Heavy risk-taking, election uncertainty and weakening corporate fundamentals compounded the technology selloff, exposing financial strains that expectations for AI demand had helped investors overlook.

In a Yahoo Finance interview on November 6, Rich Bernstein, head of global macro at Janus Henderson, said investors would become more selective about valuations and financing terms as those pressures forced closer scrutiny of technology companies.

Bernstein said portfolio beta and leverage indicated that investors had taken substantial risks. Uncertainty over post-election policy and regulation added to those exposures, although he noted that data center regulation could depend more on state governments than on the federal government.

Technology companies' fundamentals were already deteriorating, he said, but investors had assumed seemingly insatiable AI demand would make those weaknesses less consequential over time. Rising uncertainty had undermined confidence in that longer-term outlook while leaving weaker balance sheets and near-term business conditions in place.

Bernstein questioned whether the recent trading had been driven by fundamentals and described it as momentum investing. Its central risk, he said, is that investors cannot predict when the trend will reverse. He compared the reversal to running at full speed before discovering there is no ground beneath one's feet.

He nevertheless welcomed broader market participation. On the day discussed, 10 of the 11 S&P sectors outperformed the market, while the equal-weighted S&P outperformed its capitalization-weighted counterpart. Bernstein said that widening participation was healthy for the economy after a period when attention had narrowed to seven stocks, a single theme and then one sector.

Bernstein expected inflation and employment data to displace the midterm elections as the market's main focus in about two weeks. That would not remove the risks, he said: stronger-than-expected inflation or employment figures could prompt Federal Reserve rate increases, presenting another hurdle for stocks.

Large technology companies had been raising money aggressively through equity markets and especially bond markets, Bernstein said. He described companies as prioritizing the amount they could borrow over securing lower financing costs. Investors in both debt and equity would become more selective, he argued, assessing opportunities more realistically and paying closer attention to fundamentals and pricing.