AI premiums and property appetite split across markets
Big-tech valuations are being reset as the AI trade unwinds sector by sector; Chinese luxury-home demand and Korean short selling show that risk appetite is returning unevenly.
Economics & Markets··Evening
Big-tech price tags ease while growth expectations climb
Technology valuations have moderated on a price-to-earnings basis while implied future growth has climbed, a combination that Goldman Sachs Global Investment Research describes in its Global Strategy Views report as an earnings bubble rather than a valuation bubble. The report says implied forward growth is still well below the peak of the dot-com era, even though the sector’s ten-year compound annual earnings growth has passed the levels reached around 2000. Hyperscalers were capital-light for about a decade after the financial crisis; the capital spending that followed ChatGPT has eroded their free cash flow and sent them to debt and equity markets. The five largest US stocks now trade at a price-to-earnings ratio only marginally above the other 495 in the S&P 500, after holding a premium since 2017. Software has taken the sharpest reset, its global price-to-earnings premium falling to about 20 per cent from nearly 200 per cent at the start of the century, while leadership has moved to memory and chip companies whose earnings are cyclical.[1]
The AI trade unwinds sector by sector
Dhaval Joshi, formerly chief strategist at BCA Research, argues that the useful question is which AI bubble is popping today, and points to fast cycles of speculation and correction in software, silver and semiconductors. Software stocks rallied on expected productivity gains, then fell as investors judged that AI agents threaten subscription revenue. Silver tripled on demand for data-centre conductors and reversed when other conductors proved adequate. Semiconductors rose on assumed pricing power and are falling as investors question whether chipmakers hold a durable advantage. Joshi defines a bubble by the size and speed of the round trip: making a fortune in weeks or months and losing it as quickly. He names three risks that could end the sequence: a sharp rise in real interest rates, a rapid unwinding of the capital spending cycle, and a severe recession.[2]
Chinese luxury homes and Korean shorts diverge
Risk appetite is also uneven across property and equities. Sales of Chinese homes priced between 30 million and 50 million yuan rose 38 per cent in the first half of 2026 as buyers benefiting from the technology boom traded up, while analysts say the segment is too small to turn the wider market. You Liangzhou, who owns the Shanghai agency Baonuo, said most middle- and low-income households remain cautious about buying. Property and related industries account for about a quarter of China’s economic output. The sector has been under strain since borrowing limits were placed on developers in mid-2020, a crisis marked by the default of China Evergrande Group, and high-end transactions are a small share of the national market. In South Korea, outstanding short selling stood at about 19 trillion won, or 13.4 billion dollars, as of Tuesday, data from the Korea Exchange showed, up 14 per cent from 16.73 trillion won at the end of last month. Short selling stood at 15 trillion won at the end of February, fell to 12 trillion won in early March and reached 23 trillion won in early June. The benchmark Kospi has advanced 6 per cent so far this month and the tech-heavy Kosdaq 20 per cent, after a selloff last month driven by doubts over the profitability of AI-related investment and its effect on chip demand. Investors remain wary of the speed of the rebound and are still uncertain whether the chipmaking cycle has peaked. The reset in big-tech multiples, sector-by-sector AI corrections, Chinese luxury-home demand and Korean short selling show that risk appetite is not returning evenly across markets and asset classes.[3], [4]
