Equity markets pulled back last week as technology stocks led the decline, with the NASDAQ falling over 3% and the S&P 500 down 1.6%. Despite the short-term weakness, major indices remain solidly positive for the year, with the S&P up 14% and the NASDAQ up more than 19%. Gold continued to show strength, gaining over 52% year-to-date, while the bond market remained relatively flat as Treasury yields hovered around 4%. PVG highlights growing concerns about overextended valuations in the technology sector—particularly among leading AI and cloud computing firms—amid slowing growth and excessive capital spending. The circular nature of financing and revenue dependencies among large players such as NVDA, ORCL, and OpenAI adds systemic risk if demand or funding weakens.

PVG analysts note that nearly half of the S&P 500’s weighting is now concentrated in technology-related names, a level even higher than during the dot-com bubble. This heavy concentration increases portfolio risk and makes diversification essential. While major firms like NVDA and PLTR have been key drivers of market performance, their valuations are stretched, and recent margin compression at companies like META and MSFT signals possible cracks in the AI growth story. With investors facing a “damned if you do, damned if you don’t” scenario—balancing the need for exposure to outperforming tech stocks against the risk of a potential bubble—hedging strategies such as dynamic core allocation are being recommended to protect against downside volatility.

‍

‍