A lot of noise, but the AI ​​theme remains intact: Barclays By Investing.com

Despite recent market volatility, Barclays analysts say the AI ​​investment theme remains robust.

The bank said in a note on Friday that while stocks have weathered various challenges — such as the Jackson Hole meeting, Nvidia earnings and upcoming payroll data — the larger AI narrative continues to be a driving force in the market .

Barclays pointed out that Nvidia (NASDAQ: ), a key player in the AI ​​space, faced high expectations following a strong rally in early August.

“For Nvidia shares, having rallied significantly since the start of the sell-off in early August, second-quarter results were always going to be a high bar to clear,” the analysts noted.

This sentiment stems from the market’s anticipation of consistent “beat and raise” results from Nvidia, which has been the norm since Q1 2023.

However, Barclays suggested that the strong growth and excitement surrounding Nvidia may be starting to temper, potentially leading to a normalization of prices and market valuation.

Interestingly, Barclays sees this potential normalization as a positive development for the broader market.

“We actually think this could be healthy for the entire market and for an eventual extension of market yields,” the bank said.

The firm pointed out that the dynamics of the stock market has been heavily dependent on the technology sector, especially Nvidia, over the past 18 months.

As real money positioning remains heavily tech-leaning, Barclays sees this as a risk, but AI’s overall growth trajectory is still seen as attractive.

Barclays also stressed the importance of monitoring other factors such as the German election and the French Prime Minister’s announcement, but reiterated its positive outlook on the AI ​​sector.

“We still find the AI ​​space and its growth trajectory attractive, while valuations have improved,” they concluded, recommending adding EU Tech positions during market dips.