The rapid rise of artificial intelligence companies has triggered a fresh debate among global investors, particularly as scrutiny intensifies over the massive capital expenditure by large technology firms. According to Christopher Wood from Jefferies, the most intriguing development in the AI story so far is the emergence of Anthropic, a company he believes could play a pivotal role in shaping the sector’s future.

Speaking in an interview with ET Now, Wood said the flow of global news continues to be heavily influenced by political developments in the United States, but the AI sector remains the more compelling long-term narrative.

“Mr Trump continues to drive the news flow. But in the big picture Anthropic is the most interesting company to come out of this whole AI story. But the US defence sector getting involved does remind me of The Terminator movie. One of the great movies of all time, which is looking more and more prophetic. I am talking about the original Terminator,” Wood said.

The discussion around Anthropic has intensified recently amid speculation over regulatory scrutiny and geopolitical implications surrounding advanced AI development. While the concerns are still evolving, the broader conversation has quickly expanded into questions about whether the AI boom that propelled US technology stocks could face a reality check.

When asked whether the ongoing developments could challenge the dominant AI narrative that has powered US equities, Wood acknowledged that investors are beginning to question the massive spending spree by technology giants.

“Well, I think what has happened this year is that we have had a three-year AI capex race which was kicked off at the beginning of 2023 when the market suddenly focused on AI because of Microsoft’s purchase into ChatGPT,” Wood said.
He explained that the world’s largest technology companies — often referred to as hyperscalers — responded to the AI boom with an unprecedented surge in capital spending.“Then the hyperscalers responded with this huge capex binge which in my view was driven more by a negative driver than a positive one. Obviously, AI is a big opportunity, but the key thing the hyperscalers were responding to was the threat of disruption. And there is one thing these guys in Silicon Valley are obsessed with, it is disruption,” he said.

According to Wood, the scale of investment has become enormous. “This year they are projecting spending $620 billion, that is the four hyperscalers alone.”

He noted that the market has already started to question whether the heavy spending will translate into meaningful returns.

“Actually, we have started to see the market question the returns from the capex with the first quarter earning season. But the key word is start,” Wood said, adding that scrutiny is likely to intensify in the coming months.

Wood believes the bigger question investors must consider is whether the economics of AI will resemble those of the internet boom or something very different.

“The internet economy was about winner takes all. Once Google was search, Facebook are the best examples. All the extra revenue went to the bottom line. Whereas right now AI is looking more like the airline industry — capex intensive but not necessarily very profitable,” he said.

Another challenge, according to Wood, is the lack of a clear “killer application” for AI chatbots so far.

“So who is really making money out of these chat boxes? It is not really clear. What is the killer app of a chat box? So far, I would say the killer app of OpenAI is letting kids cheat on their homework but there is no real killer app,” he said.

However, he pointed out that monetisation appears more visible in enterprise markets.

“Where we see evidence of monetisation is in the corporate market and that is Anthropic, not OpenAI,” he said.

Anthropic has drawn significant attention in the technology ecosystem, particularly because it was founded by former OpenAI researchers and engineers. The company has increasingly positioned itself as a competitor in the generative AI space.

Wood said that talent migration within the industry has also been noteworthy.

“Anthropic is the most interesting company to have come out of this AI story so far and obviously the interesting point about Anthropic is they came out of OpenAI. So actually, most of the tech talent which built OpenAI has left OpenAI,” he said.

Wood added that if given a choice between the two companies from an investment perspective, his preference would be clear.

“If you ask me to invest in Anthropic or OpenAI, I am definitely investing in Anthropic,” he said.

Beyond individual companies, Wood also believes that the dominance of US equities in global markets may have already peaked. He noted that US stocks reached a record share of global market capitalisation late last year.

“To be precise, the US peaked at 67% of world stock market capitalisation measured by the MSCI All Country World Index in December 2024. In my view, that is the all-time peak,” he said.

According to him, that extraordinary share reflects the overwhelming dominance of large technology firms in global indices.

However, Wood cautioned that the massive AI spending could change the financial dynamics of these companies.

“A lot of money is going to be wasted. And they are going from free cash flow generating machines into very different businesses. They have exited their moats. They are all converging on the same area and I do not think they are all going to succeed in this endeavour,” he said.

Despite his broader concerns, Wood said that if he had to own one hyperscaler stock, his preference would be Alphabet.

While the AI debate has largely focused on technology stocks, Wood also warned that the biggest financial risks may lie elsewhere — particularly in private markets.

He explained that the software sector has already started to face pressure as investors question whether artificial intelligence could disrupt traditional software businesses.

“Conceptually the issue is now will AI eat software? Now, I am not an expert on this area but it kind of makes intuitive sense that AI could eat software,” he said.

Such a shift could have major implications for the private equity industry, which has heavily invested in software companies in recent years.

“The sector which private equity is most invested in is software and we are talking about leverage buyouts of software companies. Now doing an LBO on a software company is to me self-evidently risky,” Wood said.

He added that the growing private credit market has also become deeply intertwined with private equity financing.

“Seventy percent of private credit is funding private equity. So in reality private equity and private credit are joined at the hip and that is where we can get financial collateral damage from this AI story because this is actually the real bubble,” he said.

Interestingly, Wood does not believe the AI boom itself fits the definition of a classic financial bubble.

“AI is not a classic bubble because most of the capex has been funded by cash,” he said.

However, he noted that private credit has increasingly begun financing AI investments as well, potentially increasing systemic risks if sentiment turns.

“If that unwinds sharply, then that can cause a quicker unwind of the AI trade,” he said.

Wood also highlighted structural characteristics of the US equity market that could amplify volatility if investor sentiment shifts.

“There is a risk that the US stock market sells off more than the fundamentals warrant. The reason why that risk exists is that the US stock market is extremely retail driven, much more retail driven than the Indian stock market,” he said.

He added that passive investing has also grown significantly in the United States.

“I believe at least 50% of the market is passive, which means people are mindlessly buying stocks just because they are in a particular index and that means that everybody owns the same stocks,” he said.

Combined with algorithmic trading, this could accelerate market swings.

“In a panic it can unwind much more than warranted by the fundamentals,” Wood said.

While the AI narrative continues to dominate global markets, Wood believes the early signs of scepticism are beginning to emerge. Whether that evolves into a broader correction will depend largely on one key factor — whether the enormous spending on artificial intelligence ultimately produces meaningful financial returns.

ET Intelligence Group: Low beta stocks gain prominence in times of heightened market volatility. Amid rising geopolitical tensions, only 135 or over one out of every four stocks in the BSE 500 index have clocked 1% or higher returns over the past month and just 35 of them have gained in double digits. In either case, over half of the stocks sport a beta ratio of 0.9 or lower, signifying the rising importance of stocks that show lesser volatility than the broader market. The benchmark Sensex has lost nearly 6% during the period as investors cautiously assess the impact of the conflict in West Asia.

ETIG has identified 13 stocks that achieved double-digit returns across one month, year-to-date, and year-on-year periods. A majority of these companies have India-centric operations and have shown improving margins and impressive revenue and profit growth in FY26 so far. The list includes Hitachi Energy India, Finolex Cables, Aster DM, Krishna Institute of Medical Sciences, Linde India, Schaeffler India, Solar Industries, JB Chemicals and Pharmaceuticals, Great Eastern Shipping, and Vardhman Textiles among others.

In addition, six stocks currently trade near their 52-week highs notwithstanding the current market volatility. These include Hitachi, Aditya Birla Sun Life AMC, Schaeffler, Great Eastern Shipping, Vardhman, and JB Chemicals.

Hitachi Energy India topped the list with 34% month-on-month return. The stock of the company, which provides electricity grid management and automation solutions to the power sector, has nearly doubled in a year following strong financial performance supported by rising order book. It reported a record-high order backlog of around ‘29,900 crore at the end of December 2025.

Hitachi was followed by Finolex Cables and Aster DM Healthcare with monthly stock returns of 30% and 25% respectively.

A beta below one reflects stocks that are less susceptible to market fluctuations. The rising market volatility may affect a stock’s beta coefficient.
In the case of BSE 500 companies, the number of stocks having a beta of either 0.9 or lower now stands at 217 compared with 172 at the beginning of CY2026 and 204 a year ago.

Nifty’s break below its 200-day moving average has intensified concerns of a deeper market correction amid rising geopolitical tensions and weak global cues. In an interaction with Anand James, Chief Market Strategist at Geojit Investments, he outlines key support levels for the index, the likelihood of a rebound in Nifty IT, outlook for PSU banks, and his stock picks for the week.

Edited excerpts from a chat:

Nifty’s breach below 200-DMA in the last week of February accelerated the decline as missiles in the Middle East are empowering bears. What are the key support and resistance levels to watch out for in this scenario?
Having closed under the 200-day SMA for five successive days, the ongoing slide appears to be gaining momentum for an extended slide to 23535. This being the default scenario, let us also weigh the reversal possibilities. While Friday had opened with upside hopes having formed a morning star upside reversal candlestick pattern on Thursday, the close below Thursday’s low diffused such hopes. However, the close was not deep enough to invalidate the upswing possibilities signalled by a stochastic momentum oscillator. Additionally, we have now had four days of consistent trades near or below two standard deviations from the 20-day mean, pointing to the possibilities of a mean reversion move. This encourages us to look for upswings, as long as surprise drops do not stretch beyond 24074, which is where the downside marker may be placed.
Nifty IT index ended in the red for the 7th consecutive week on Friday. Back in April-May 2022, we saw 8 such negative weeks before a sharp pullback. Is the current downtrend increasing hopes of a sharp pullback rally now?
While the Nifty IT index has indeed ended in the red for a seventh straight week, history shows that such extended declines have sometimes preceded sharp near‑term rebounds. Apart from the April-May 2022 stretch of eight consecutive down weeks, which was followed by a swift pullback, a similar pattern occurred in July 2008, when a seven‑week decline also triggered a strong rebound averaging 3-5% in the following week. Currently, the index remains in a short‑term corrective phase, having broken below a long‑held rising support trendline and now stabilising near the 30000 zone. The decline has been steep and volume‑heavy, but smaller real bodies in recent candles hint at cooling downside momentum.

Key support lies at 29500-30000, where a defended base could spark a relief bounce toward 31200-31700. From the derivatives perspective, sentiment appears mixed, with about 33% of near OTM put strikes witnessing short or long buildup, and nearly 50% of stock futures showing long additions or short covering indicating traders are divided on next week’s trajectory. Moreover, several index majors like Infosys, Wipro, HCLTech, Persistent have formed weekly reversal setups, supporting a short‑term bullish bias. Overall, while caution remains warranted, the current structure does increase the odds of a pullback rally if support holds.
Mazagon Dock was among the top gainers in the week. What does the chart look like for the week ahead?
MACD registered a signal line crossover on Friday, while also posting a histogram above centre line, the first such event since late January. This is a positive set up. However, RSI is yet to break its recent peak, and the swing from two lower to upper bollinger band took just two days, pointing to the abruptness of the up move. Not surprisingly, this move also failed to breach January’s peaks, and the subsequent close back inside the bollinger band pointed to potential exhaustion in bullishness, especially having traded below VWAP all through Friday. We would however be encouraged to look at the stock on dips to 2420, with downside markers placed below 2350. Alternatively, a direct rise above 2360 could give us the confidence to play a 2800 move.
PSU bank index was among the worst hit during the week. Do you think we could now see some buying coming in again?
Nifty PSU Bank Index has entered a short‑term cooling phase after an extended rally, with the weekly chart forming an Evening Star pattern, a traditionally bearish reversal signal indicating fatigue at higher levels. This pattern suggests the recent up‑move may be losing momentum. On the daily chart, however, prices have slipped toward a horizontal support zone near 9150-9200, where the index previously consolidated, increasing the possibility of a brief oversold pullback in the very short term. Volumes during the latest decline remain moderate, indicating the absence of aggressive long unwinding. If the support zone holds, the index could attempt a bounce toward 9350-9450, though the broader tone remains cautious due to the weekly reversal pattern. A sustained move below 9100 would weaken the structure further and expose the index to deeper retracements toward 8800. Overall, short‑term sentiment is neutral to mildly negative, with a near‑term rebound possible but the weekly setup advising caution on fresh longs until the index reclaims upward momentum.

Give us your top ideas of the week.
POLYMED (CMP: 1356)

View: Buy

Target: 1485

SL: 1320

Poly Medicure has shown early signs of stabilisation after a prolonged decline, with the weekly chart displaying a strong rebound candle from oversold zones. Price has reclaimed the 1330-1350 band, which acted as minor support earlier, and improving volumes indicate emerging buying interest. The daily momentum setup also hints at a short‑term recovery, with RSI turning up from oversold levels and MACD showing early signs of flattening. As long as the stock holds above the 1320 level, the pullback setup remains valid. A move above the recent swing region near 1400 could strengthen momentum further and open the way toward the upside target of 1485. Overall, the short‑term outlook is cautiously positive, supported by improving price behaviour and early momentum confirmation, while 1320 remains the key reference level to keep the bullish structure intact.

CHALET (CMP: 764)

View: Buy

Target: 790

SL: 740

Chalet Hotels is attempting to stabilise after a steady multi‑week decline, with the daily chart showing prices holding near a horizontal support zone around 755-765. Momentum indicators reflect an oversold setup with RSI hovering near lower bands and trying to flatten, while the MACD histogram shows early signs of slowing downside momentum. A minor bullish divergence is also beginning to build, suggesting the stock may attempt a short‑term rebound if the support zone holds. Any move above 775 could strengthen near‑term sentiment and open room for a push toward the immediate upside target of 790. However, the recovery structure remains vulnerable unless price firmly stays above the 740 level.