Key Events: Surprising intraday reversal stuns AI bulls
Nvidia reported strong earnings and offered a better than expected revenue forecast after the market closed on Wednesday. The news brought an initial sigh of relief to those leveraged to the AI trade. Markets surged on the news Thursday morning, but a dramatic reversal took NVDA down roughly 3% for the day and the tech-heavy Nasdaq ended down more than 2%.
John Williams, President of the New York Fed, suggested that another near term rate cut could be warranted early Friday1. This revived the possibility of a December rate cut and it sparked a week end rally.
Market Review: Crypto and AI angst breed volatility
Stocks were decidedly lower for the week. The tech sector was off by over 5%, but healthcare, consumer staples and communications sectors all showed gains2. The Bloomberg Bitcoin Index fell more than 10% and the volatility index spiked. Small and mid-caps fared better than large. International markets suffered due to the risk-off unwind and a modestly stronger dollar.
The aggregate bond index rose as Treasury yields fell.
Outlook: AI bubble debate to last for some time
Ray Dalio published a piece titled “The Big Dangers of Big Bubbles with Big Wealth Gaps” this past week and GMO published a newsletter titled “It’s Probably a Bubble, but There is Plenty to Invest In”3.
Debating whether we are in a classic bubble or not may be missing the whole point for an asset allocation practitioner. The capital spending cycle by the AI hyperscalers has exceeded expectations massively and it has led to concentration risk and valuation risk. The euphoria could be creating misallocation opportunities for investors outside of the popular AI trade.
According to recent research from Goldman Sachs, capex for the major hyperscalers is up by 68% this year and is projected to grow by 34% in 20264. While this forecast indicates a significant deceleration in the rate of growth, the capital spending cycle should continue to grow at a very high rate and continue to support economic growth both domestically and internationally.
Many AI related stocks are likely discounting an unsustainable future, but some stocks from sectors outside of technology and throughout the capitalization spectrum are more reasonably priced, provided the overall economy remains healthy. With the public investor seemingly so fascinated with “AI Bubble“ concerns as the chart below from Melius Research indicates, we continue to believe that a well-diversified multi-asset approach should serve investors well whenever the inevitable deceleration in the AI buildout weighs on the valuations of growth stocks.
AI Bubble Worries Likely to Remain a Feature for the Foreseeable Future
OneAscent Navigator Outlook: November 2025
This material is intended to be educational in nature , and not as a recommendation of any particular strategy, approach, product or concept for any particular advisor or client. These materials are not intended as any form of substitute for individualized investment advice. The discussion is general in nature, and therefore not intended to recommend or endorse any asset class, security, or technical aspect of any security for the purpose of allowing a reader to use the approach on their own. Before participating in any investment program or making any investment, clients as well as all other readers are encouraged to consult with their own professional advisers, including investment advisers and tax advisors. OneAscent can assist in determining a suitable investment approach for a given individual, which may or may not closely resemble the strategies outlined herein.[6]
[1] Source: Bloomberg – “Williams Sees Room for ‘Near-Term’ Rate Cut’” reprinted from Wall Street Journal, 11/21/2025.
[2] Source: Select Sector SPDRs Sector Tracker data.
[3] Source: Ray Dalio paper from Linked-In: “The Big Danger of Big Bubbles with Big Wealth Gaps”. GMO Newsletter published by Grantham, Mayo and Van Otterloo: “It’s Probably a Bubble, but There Is Plenty to Invest In”.
[4] Source: Goldman Sachs Research, “The Trajectory of AI capex and the next beneficiaries of corporate AI adoption”, 11/18/2025.
[5] Source: Syz Private Banking and Melius Research as depicted in Linked-In, 11-22/2025.
[6] Market Returns reference the following indices: Large Cap – S&P 500, Mid Cap Growth – Russell Midcap growth, Mid Cap Value – Russell Midcap Value, Small Cap – Russell 2000, Developed – MSCI EAFE, Emerging – MSCI Emerging Markets, Aggregate – Bloomberg US Aggregate, High Yield – Bloomberg High Yield
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