Nvidia delivered another strong quarter, but the market’s muted response underscores a broader shift in how investors are approaching artificial intelligence, mega-cap stocks and equity valuations. Strong earnings are no longer enough to drive outsized gains as capital spending and return metrics face greater scrutiny.
BNN Bloomberg spoke with Christine Tan, portfolio manager at SLGI Asset Management, who said investors are becoming more selective within AI and U.S. equities, rotating globally for better valuations while maintaining a modest overweight in Canadian banks as credit conditions stabilize.
Key Takeaways
- Nvidia’s strong earnings reinforce AI demand, but investor focus has shifted toward capital intensity, debt funding and return on investment as roughly $700 billion in AI spending is anticipated this year.
- U.S. earnings season has been solid, with profits running about 7.5 per cent above expectations, yet elevated valuations are limiting upside reactions to beats.
- Market leadership is rotating beneath the surface, with greater dispersion across sectors and a more selective approach within the “Mag Seven.”
- Investors are increasingly allocating incremental capital outside the U.S., citing more attractive valuations and improving earnings trends in global markets.
- Canadian banks are modestly favoured as provisioning pressures ease and the mortgage rate reset cycle approaches its peak, though soft employment conditions remain a watch point.
Read the full transcript below:
ANDREW: Investors are somewhat muted in their reaction to Nvidia. The company delivered another blockbuster quarter, with the stock up almost 50 per cent over the past year and revenue soaring more than 70 per cent. However, the forecast did not thrill investors. Let’s get perspective on the tech mega-caps and AI from Christine Tan, portfolio manager at SLGI Asset Management. Christine, great to see you. Thanks very much for joining us.
CHRISTINE: Good morning, Andrew. Great to see you.
ANDREW: Let’s take a quick look at Nvidia in the pre-market. We didn’t see a huge reaction to the numbers. Did anything jump out at you?
CHRISTINE: No, I think you summarized it really well. The numbers were very strong. Jensen spoke about visibility into roughly $700 billion of AI-related capital spending this year, which is significant.
I think it’s really about the high hurdle of expectations. Nvidia has performed extremely well over the past three-plus years, and at this level, while it may not be as expensive as it was a year ago, expectations are very elevated.
One of our key investment themes this year is looking beyond the core AI names to identify the next beneficiaries, but also to assess who may be disrupted. There is also more caution around what we call capex fatigue. On the one hand, $700 billion in AI capex is positive for Nvidia. On the other, historically high free-cash-flow tech companies are now issuing debt to fund multi-decade investments. That changes how investors view the space compared with one or two years ago.
ANDREW: How are you positioning around the “Mag Seven” stocks more broadly? Are you overweight or underweight?
CHRISTINE: Our managers, especially in the U.S., are very selective within the AI space. Valuations are a key focus. We are not broadly overweight the complex. There are a few names where the relative risk-reward is attractive and position sizes are larger. There are others where we may have no position because of valuation concerns or limited visibility into how long earnings growth can be sustained.
ANDREW: Broadly speaking, what is your equity allocation? Are you overweight U.S. stocks right now?
CHRISTINE: We are neutral relative to our strategic weight. Since the start of 2025, we’ve been emphasizing global opportunities. That doesn’t necessarily mean trimming U.S. exposure, but allocating incremental capital to global equities.
Valuations are more attractive outside the U.S., and many global markets were slower to see earnings recover after the lockdown and reopening period.
Within the U.S., year-to-date performance has appeared muted at the index level, but there has been significant rotation beneath the surface. We are focusing more on diversification and broadening exposure in a nuanced way, compared with the more concentrated environment of two years ago.
ANDREW: U.S. stocks aren’t cheap, so even when earnings beats come in, we’re not seeing a huge upside reaction?
CHRISTINE: That’s right. We’re roughly 90 to 93 per cent through the S&P 500 earnings season. It has been a strong quarter. About 74 per cent of companies beat earnings expectations, with aggregate earnings coming in about 7.5 per cent above consensus.
By any measure, that’s a solid report card. However, valuations are elevated and expectations are high, so the hurdle for stocks to reprice higher is greater.
We are seeing dispersion across sectors. Industrials and some consumer names have contributed to earnings growth, but performance is uneven. In the consumer space, higher-income consumers remain resilient, while others are trading down to value-oriented retailers. The environment is nuanced, and outcomes vary depending on where a company sits in the value chain.
ANDREW: What about the Canadian banks? We’ve seen three major beats and a strong quarter overall.
CHRISTINE: Our Canadian managers do have a slight overweight to the banks. About a year ago, they began to see the provisioning cycle bottoming. While we’re not fully through it, we’re closer to the end of the mortgage rate reset cycle.
Borrowers who locked in very low rates in 2020 and 2021 are now resetting at higher rates, but we’re nearing the end of the most significant resets. As rates normalize, the incremental impact becomes smaller. That is a net positive for consumers and for banks.
We are also seeing a stronger fiscal response from the federal government, which supports economic activity. However, employment conditions in Canada remain somewhat soft.
Overall, it’s not an outright bullish call, but banks have managed their balance sheets well through this cycle, and provisioning pressures are moderating.
ANDREW: Christine, thank you very much. Christine Tan, portfolio manager at SLGI Asset Management.
---
This BNN Bloomberg summary and transcript of the Feb. 26, 2026 interview with Christine Tan are published with the assistance of AI. Original research, interview questions and added context was created by BNN Bloomberg journalists. An editor also reviewed this material before it was published to ensure its accuracy and adherence with BNN Bloomberg editorial policies and standards.
