CONTRIBUTORS
Marcus Weyerer, CFA
Director of ETF Investment Strategy EMEA
Franklin Templeton ETFs
NVIDIA’s latest results reaffirm our view that the artificial intelligence (AI) narrative remains fundamentally driven. The company’s data-centre business continues to dominate, powered by an unrelenting demand for AI compute. The broader equity market has also just delivered one of the strongest reporting seasons since COVID. Yet despite persistent revenue and earnings beats, market reactions have been muted as investors reassess whether current valuations still square with earnings power.
AI, Metaverse earnings outpace price
Source: Bloomberg, November 2025. Past performance is not an indicator or a guarantee of future performance. Indexes are unmanaged and one cannot invest directly in an index. Individual companies mentioned are intended as examples only and are not to be taken as advice nor are they intended as a recommendation to buy or sell any investment or interest.
Concerns about overstretched multiples have, in our view, become indiscriminate. While there are pockets of speculation—and even flashes of exuberance—we do not see evidence that these have become pervasive enough to compromise the broader market. Context helps: following the recent selloff, NVIDIA trades around $180, implying a blended price-to-earnings (P/E) of 26x. That is roughly 28% below Walmart, a mature U.S. retail giant hardly associated with speculative excess.
The broader AI ecosystem reflects the same pattern. The Solactive Global Metaverse Innovation Index—a loose proxy for AI and immersive-tech exposure—has pulled back by double digits in recent weeks. Year-to-date, index earnings are now growing faster than prices. Blended earnings per share (EPS) for the index has risen more than 30% in 2025, compared with a 16% increase in the underlying basket, resulting in a near -13% contraction in valuations.
Looking ahead to 2026, markets will likely require greater selectivity, particularly with the trajectory of Fed rate cuts still uncertain. Speculative segments—after a powerful run since April—may come under pressure and occasionally spill over into fundamentally stronger areas, adding bouts of volatility to headline benchmarks.
But investors should avoid letting these risks overshadow the broader, structural opportunity. AI, blockchain and the metaverse remain interconnected long-term themes. For now, however, markets are pricing them more like cyclical growth stories than secular, disruptive megatrends. For long-term investors, that shift may create an attractive window to begin building exposure or to add to existing positions.
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