(Investorideas.com
Newswire) a go-to platform for big investing ideas, including AI
and tech stocks issues market commentary from deVere Group.
More volatility is expected in tech stocks over the next few months
as the market contends with fresh evidence that artificial
intelligence is beginning a wider reckoning and as fears grow about
its disruptive effects on existing business models.
This is the warning from the CEO of one of the world’s largest
independent financial advisory organisations as software and
services equities tumble sharply on concerns that faster, more
capable AI tools could erode pricing power in legacy software
models, wiping out nearly $1 trillion in market value in recent
sessions.
Nigel Green, chief executive of deVere Group, says today’s
market moves mark a fundamental re-evaluation of value in the
digital economy.
He explains: “Investors have moved beyond AI hype and are
now rigorously testing business models against the harsh reality
of what these technologies actually deliver.”
“When machines can automate complex analytical, legal and
compliance tasks that once justified premium pricing, the entire
logic underpinning software valuations is up for
re-assessment.”
This transition from optimism to differentiation has created
pronounced bifurcation across technology sectors.
While AI infrastructure and data-centre builders have held
relatively firmer ground, companies built on recurring software
licences and process automation have been most exposed in the
selloff.
“What we’re witnessing isn’t simply ‘AI
excitement ebbing’, it’s a redefinition of which parts
of tech genuinely benefit from intelligence automation and which
parts are most vulnerable to obsolescence.”
Market indicators underscore these tensions. Software indexes in
Europe, the US, and Asia have all posted steep declines as investors
digest the implications of new generative AI tools that handle core
enterprise workflows.
The Nasdaq’s tech-heavy profile has felt particular strain,
while commodities such as gold and precious metals have risen as
traditional safe havens amid equity volatility.
Meanwhile, some tech names with deep AI concentration or earnings
resilience have bucked the trend, reflecting a growing premium for
proven monetisation and sustainable margins.
The deVere boss emphasises that this moment is not solely about fear
of technology replacing humans.
“The deeper issue markets are grappling with is economic:
pricing power is now being adjudicated through AI’s ability
to unbundle value, compress workflows, and deliver outputs with
minimal human intervention.”
“In sectors where incumbents cannot justify their cost
structures in an AI-driven context, valuations are adjusting
rapidly and ruthlessly.”
He highlights two core mechanisms driving the sell-off.
First, AI diminishes switching costs by offering equivalent or
superior service with far less friction, making entrenched long-term
contracts less defensible.
“When customers can pivot to intelligent agents that perform
at scale and at lower cost, the lock-in that once supported high
valuations starts to evaporate.”
“Second, the gap between promise and monetisation narrows
under scrutiny, forcing investors to think much more critically
about earnings sustainability.”
Nigel Green underscores that volatility may persist until the market
reaches a new equilibrium on how AI translates into durable profit
streams.
“Expect continued differentiation,” he says.
“Companies that control the economics of AI — through
proprietary infrastructure, data moats, or genuine scarcity in
service delivery — will attract capital.”
“Others that merely embed generic AI capabilities to defend
legacy models will find their margins under sustained
pressure.”
He also notes that geopolitical and macroeconomic factors are
amplifying these thematic shifts.
With macro risks such as tariff tensions and interest rate
uncertainty still present, capital flows are increasingly selective,
favouring quality and proven growth prospects over broad
momentum.
“AI intersects with macro realities that heighten market
sensitivity to any signal that future earnings could be
compromised.”
Looking ahead, the CEO anticipates further stock price dispersion in
the tech complex as earnings releases and valuations are
recalibrated against real economic benefit from AI deployment.
“Investors will reward companies that demonstrate clear
revenue capture from their AI investments,” he notes.
“Conversely, those that fail to adapt cost bases or innovate
beyond legacy frameworks will continue to face valuation
headwinds.”
In his view, this period of adjustment, while uncomfortable,
represents a maturation of how markets price innovation in a world
where intelligence automation is rapidly becoming a fundamental
competitive factor.
“The era of unquestioned software pricing power is
ending.”
He concludes: “Markets are now pricing based on tangible
economic differentiation, not narrative alone.”
“This will create volatility, as we’ve seen in the
last few days – and volatility always creates important
investor opportunities.”
