Are AI stock valuation fears still limiting how long markets can surge?

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Valuation worries are still limiting how long AI stock rallies can last

Investor concerns that valuations for AI-related companies have become stretched after years of gains have continued to weigh on markets, contributing to volatile trading in recent days. While strong earnings and forecasts from chip firms Micron and Qualcomm have helped lift parts of the tech-heavy region, analysts remain sceptical about a long, sustained run higher for AI stocks as valuation worries persist.
Micron and Qualcomm lifted tech sentiment, but not the valuation concern
Asian equities rose after chip giants Micron and Qualcomm reported strong results and outlooks that eased some worries around the recent AI-led rally to record highs. Micron said customers had committed US$22 billion for its memory chips, while Qualcomm expects US$15 billion in data centre sales by 2029, supporting gains in tech-heavy markets such as Japan and South Korea.
Investors have been reacting to stretched AI valuations in recent sessions
The market pressure described in recent days was linked to the belief that AI-related company valuations had become too high after multi-year increases. This has been associated with volatile sessions, even as trading improved following post-earnings moves.
Analysts remain sceptical of an “euphoria” lasting across the sector
Nick Twidale of ATFX Global said the Micron update was positive and pointed to a strong move higher tied to the earnings, but he was not sure how long excitement would last across the broader sector. He explicitly tied the outlook to valuation concerns that he said would continue to weigh on sentiment going forward.
Near-term momentum may face headwinds even as positioning cools
Market analyst Tony Sycamore at IG described a “massively needed shot in the arm” from Micron’s earnings, while noting data suggesting broader cooling in positioning. That backdrop could challenge tech’s momentum in the near term, aligning with the view that valuation fears are still a constraint on how far rallies can extend.

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Are AI stock valuation fears still limiting how long markets can surge?

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