Rebalan­cing Portfo­lios

June 10, 2026

Is the AI rally over?

We view the current price correc­tion among AI benefi­ci­a­ries as a healthy conso­li­da­tion follo­wing strong price gains, not as a trend reversal. The price increases of recent months were not purely specu­la­tive, but were funda­men­tally supported by impres­sive earnings growth. For 2026, earnings growth of over 30% is expected for stocks in the AI universe.

As demand for AI appli­ca­tions is growing rapidly, we expect the expan­sion of AI infras­truc­ture to continue and earnings growth to persist. Data centers, semicon­duc­tors, power supply, and digital infras­truc­ture remain key compon­ents of this invest­ment cycle, which is set to continue for several more years.

Time to rebalance

As optimi­stic as we remain about the long-term prospects for AI, profit and share price growth at the current pace is not sustainable. Sooner or later, the expan­sion of margins at semicon­ductor compa­nies will reach its limits and return to normal.

In line with our philo­sophy of counter­cy­clical rebalan­cing, we there­fore believe it is appro­priate to reduce our positions in overheated market segments. We have already imple­mented this strategy over the past month by selling Qualcomm and parti­ally divesting our holdings in ABB and Alphabet.

This recom­men­da­tion comes just a few weeks after we identi­fied a buying oppor­tu­nity in the techno­logy sector in early April. This clearly illustrates the extent of the current sector rotation and the oppor­tu­ni­ties it presents for active managers.

Prepare for greater volati­lity

Looking ahead to the coming months, the stock markets are set to face several stress tests.

First, the restricted shipping traffic through the Strait of Hormuz is causing bottlen­ecks in the supply of crude oil, lique­fied natural gas, and petro­che­mical feedstocks. This threa­tens to result in longer delivery times and decli­ning inven­tory levels in downstream industries.

Second, as a direct result, infla­tion rates are rising globally. In the U.S., they are expected to exceed 4%. This is hardly an environ­ment in which the Federal Reserve can cut interest rates quickly, especi­ally since the labor market remains in good shape.

Third, the supply of capital is set to increase signi­fi­cantly in the coming months as fresh funds are raised on the capital markets. Additional bond issuances by govern­ments and corpo­ra­tions could push up long-term interest rates and limit valua­tion poten­tial in the stock markets.

These short-term headwinds have led us to refrain from reinve­sting all of our realized gains and to reduce the equity alloca­tion back to a level close to its initial weighting at the start of the year.

What’s going on with crypto assets and gold?

Gold and crypto­cur­ren­cies are also suffe­ring amid rising interest rate expec­ta­tions and the capital market’s strong focus on AI. Gold has given up the gains of around 20% it had made since the start of the year. Bitcoin and Ethereum have seen even steeper correc­tions.

Since the struc­tural factors under­lying both asset classes remain intact (high govern­ment debt, long-term infla­tion, and growing geopo­li­tical risks), we are maintai­ning our positions.

Conclu­sion regar­ding our invest­ment strategy

We remain invested in the AI sector for the long term, but are making targeted adjust­ments to reduce concen­tra­tion risk and improve the portfolio’s balance. Given the solid economy and strong earnings growth, we are confi­dent about the second half of the year and believe we are well positioned with our diver­si­fied portfolio and high-quality equity invest­ments.