Watch the latest episode of Portfolio Perspectives as Tom Santa-Olalla and Tom Kynge, a Portfolio Manager in our Multi-Asset team, address clients’ questions about concerns of an artificial intelligence-related bubble in equities, the current valuations of companies versus their historical averages, and their outlook for 2026.
The discussion explores why the team is actively avoiding unprofitable technology companies – the area of the market they believe is showing the greatest exuberance. These companies aside, the expectation is that the AI-driven trend could continue for some time yet, with share prices largely being driven by revenue growth rather than valuation expansion.
Following what was widely interpreted as a largely positive Q3 earnings season, Tom Kynge notes that many of the quality stocks held in Sarasin portfolios have not yet been rewarded with share price gains. However, he sees the fall in the quality valuation premium – what investors are willing to pay, in terms of a premium, to hold quality companies – to below its ten-year average as an opportunity to invest in favoured names at relatively attractive levels.
Looking ahead, the expectation is for a relatively robust global economy, supported by higher government spending, while weakness in consumer demand could be offset by further interest rate cuts in major markets.
Be sure to watch the Portfolio Perspectives video below, and take a look at the latest update from Guy Monson in our regular Six Minute Strategy, which this month considers opportunities for 2026.
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