The stock market is currently undergoing a “repricing event.” This is Wall Street speak for “prices are too high, and they are coming down.” JP Morgan’s Daniel Pinto called it a “reassessment.” Whatever you call it, it is painful.
The repricing is driven by the realization that the AI boom might be a bubble. If Nvidia is not worth $4 trillion, then the S&P 500 (which is heavily weighted towards it) is not worth its current level.
The crypto market has already repriced, shedding $1 trillion. It is the fastest market to react. The stock market is slower, but it is following the same path. The FTSE 100’s decline is part of this global adjustment.
Investors must ask themselves what the “fair value” of these companies is without the “irrational” AI premium. The answer is likely significantly lower than today’s prices.
This process will continue until valuations align with reality. As Pichai warned, no company is immune to the math.