While the long-term outlook for AI remains compelling, the increasing reliance on external financing, elevated valuations and unprecedented market concentration suggest investors should distinguish between AI’s structural opportunity and the cyclical risks embedded in current expectations.

Investors appeared willing to look through the geopolitical uncertainty and refocus on corporate earnings. However, rather than illustrating broad market resilience, this rebound has been propelled by a limited number of Artificial Intelligence (AI) related stocks.

This quarter’s market advance has been remarkably narrow, concentrated in a small number of technology focused stocks — a marked contrast to the rally at the start of 2026, which saw a notable broadening of returns.

In an environment that broadly rewarded concentrated bets on cyclicals or perceived AI-beneficiaries, Mondrian focused on the consistent application of our philosophy delivering attractive asymmetric return characteristics.,

For long-term investors, the question is not whether the US will continue to produce world-class companies, but whether current relative pricing and portfolio concentration appropriately reflect the breadth of global opportunity.

The degree of impact varies significantly across regions, primarily reflecting differences in energy dependence, external balances, and policy credibility.