Global Equity Rally Pauses as AI Valuation Concerns Mount

A shift in market sentiment is underway following a period of strong performance for global equities. The primary catalyst for recent volatility stems from growing investor apprehension over stretched valuations within the artificial intelligence sector, prompting a notable rotation into more defensive areas of the market. Underpinning the broader landscape, however, are resilient corporate earnings that continue to provide fundamental support.

November 2025 has witnessed a clear change in dynamics. Capital is increasingly being reallocated toward defensive sectors such as healthcare and consumer staples. This movement is a direct consequence of the extreme valuations reached by AI-related stocks after their powerful rally, which are now undergoing more rigorous scrutiny. Despite these portfolio adjustments, hard data offers a counterbalance: technology company profits remain robust, creating a stable foundation for share prices and helping to prevent a more severe downturn.

The structure of a major global ETF highlights a significant dependence on U.S. technology, rendering it susceptible to corrections in that segment. North American equities dominate the portfolio, accounting for nearly 76 percent of its holdings. The technology sector alone represents a substantial 28.51 percent. Furthermore, concentration in top holdings is pronounced: the ten largest positions collectively make up almost 28 percent of the entire fund's assets.

Should investors sell immediately? Or is it worth buying MSCI World ETF?

Leading the list is Nvidia with a weighting of 5.35 percent, closely followed by Apple at 5.15 percent and Microsoft at 4.20 percent. These "mega-cap" companies exert considerable influence over the overall market's direction. Consequently, recent investor nervousness regarding AI-sector valuations directly impacts the ETF's performance, given that these three giants alone constitute almost 15 percent of the portfolio.

The key question for the path ahead is whether strong earnings metrics can sustainably offset valuation concerns. As long as the fundamental profits of these technology leaders remain convincing, the structural upward trend for the market is likely to stay intact, even amidst the current phase of consolidation.