Nvidia lost $500 billion in market value this week as stock market leadership shifted toward other companies, Manish Kabra, chief US equity strategist at Societe Generale, said in an interview.
Other semiconductor companies added $650 billion over the same period, he said. He spoke on Bloomberg Television's Nov. 13 broadcast of “Microsoft Races to Fix Outage, Stocks Slip of Inflation Test.” The gains supported his view that investors were spreading their holdings beyond the companies that previously led the market.
“I think there's a change of leadership within the index itself,” Kabra said. He identified the equal-weight S&P 500, which gives each company the same influence, as the best-performing US index this year.
Kabra said uncertainty following Jensen Huang's departure as Nvidia chief executive increased the importance of interest rates and spending on artificial intelligence infrastructure. He stopped short of concluding that Nvidia would perform worse after the leadership change.
Demand for AI remained the reason companies were spending on the technology, he said. Cloud computing providers' backlog, the value of customer business awaiting delivery, rose to $2.5 trillion from $1.5 trillion at the start of the year.
“Ultimately, there's demand for AI,” Kabra said. He described cloud revenue growth and outstanding orders as measures of the demand supporting those companies' investment plans.
Investors looking beyond AI infrastructure could consider consumer businesses, industrial companies and power suppliers, he said. The equal-weight index offered access to those parts of the market.
For 2027, his team preferred companies selling AI products and businesses using AI to improve productivity over companies building the infrastructure. He divided the industry into those three groups when explaining the team's approach.
“We are way more focused on” businesses that make money from AI and “productivity beneficiaries,” Kabra said, referring to businesses that sell or use AI. He nevertheless said semiconductor shares retained their tendency to rise and fall sharply through economic cycles.
Drawing on semiconductor cycles from the mid-1990s through 2000, Kabra said the Federal Reserve's final interest-rate increase historically marked a bottom for the sector. His team expected the Fed's strongest inclination toward higher rates in the first quarter of 2027, which he considered the clearest time to position for semiconductor shares.
Companies outside technology still wanted to adopt AI, he said. That demand supported cloud providers and AI developers, whose investment in turn supported spending on infrastructure.
Kabra said lower Treasury yields were needed for stronger gains across both cloud computing providers and semiconductor companies. Yields below 4% would support that outcome, while yields near 5% were consistent with a slower rise in the stock index.
He did not specify how far Nvidia shares might fall or when uncertainty over its leadership would clear.
