Indian markets to act as hedge in global AI play

The funds that once chased global artificial intelligence (AI) and semiconductor-related stocks in emerging and developed markets will look to return to India, analysts said.

- SAI ARAVINDH & PUNEET WADHWA

Analysts are growing cautious about the surge in semiconductor and AI stocks, warning that stretched valuations may signal a bubble. The Philadelphia Semiconductor Index is valued at 53.5 times price to earnings (P/E), above the 10-year average of 28.4 times, according to Bloomberg.

So far this year, the gauge for semiconductor-related stocks — the Philadelphia Semiconductor Index — is up 40 per cent, while the Magnificent 7 index and the tech-heavy Nasdaq Composite have risen by 23 per cent and 21 per cent, respectively. During the same period, the S&P 500 index has risen 16 per cent, while back home, Nifty50 is up 9.5 per cent.