Has Big Tech Finally Peaked?

What are the negatives for Big Tech and Nvidia? Because at some point the market will get something negative into its head that triggers ‘peak expectations’ and peak share prices. There is a lot of sentiment in Big Tech share prices that is fickle. Expectations are high. What are the risks?

• The biggest risk is a general stock market correction – high PE stocks won’t survive a broader market sell-off. It could happen for many reasons (the ‘Big One’?).
• A demand plateau for chips – a growth slowdown is all it will take to undermine the whole AI complex.
• Any sort of capex hesitation from a hyperscaler (the AI and cloud centre builders). Nvidia gets 56% of its revenue from four customers. It has a concentration risk. If Alphabet, Amazon, Meta or Microsoft say the wrong thing (cost-cutting?), they could crater Big Tech sentiment and Nvidia.
• An Nvidia drop (for whatever reason) would cause ETF selling, and selling begets more selling. There are a lot of ETFs that depend on Nvidia as a large component. It is 8.1% of the S&P 500.
• Another DeepSeek moment – the realisation (once again) that there are competitors, that AI is going to become a commodity and that the rolled-gold version of AI LLMs is overkill, with margins and prices under pressure.
• Domestic competition leading to lower chip prices – Meta, Amazon and OpenAI are developing their own AI chips. Nvidia commands 73% margins because it can. One day, maybe it can’t. AMD, Intel and other specialised ASIC makers are ready to compete.
• China developing its own ‘adequate’ chips. Enough to do the job. At the moment, they are a customer.
• A US–China blow-up – tariff tensions, chip restrictions, China banning US chips, China promoting domestic chip development.
• China invading Taiwan (that would kill it) – Nvidia doesn’t own factories and relies on outsourced production, chiefly from TSMC.
• AI development coming under attack for environmental reasons.
• Power – a possible AI bottleneck.

Any more?

This is simply a healthy process to keep us objective. We are ‘up there’. There is nothing to do until the risks manifest themselves, and nothing to be sold until the herd starts to worry. At the moment, it’s quite relaxed. So we continue to watch the herd. No predictions.