Tech stock fundamentals deteriorating, overshadowed by AI expectations… "Investors will scrutinize prices more closely"

Tech stocks sold off as excessive risk-taking, post-election regulatory uncertainty and deteriorating corporate fundamentals converged, according to Janus Henderson global macro chief Rich Bernstein. Bernstein said elevated beta and leveraged positioning showed investors had been carrying substantial portfolio risk, while AI demand expectations had masked mounting financial strain at tech companies. He flagged weakening balance sheets and near-term earnings conditions as key drivers behind the decline. The selloff matters because it signals a shift toward stricter scrutiny of valuations and financing terms across the sector. What to watch next is whether investors demand tougher pricing on new capital raises and how upcoming earnings reflect the underlying financial pressure.