The Master's Playbook: How Institutional Investors View the U.S. Tech Giants and Market Outlook at Present

TradingKey - This week, with tech giant Nvidia Corp. releasing its Q3 2025 earnings, the reporting season for the US stock market's 'Magnificent Seven' has officially concluded. Simultaneously, global markets are intensely debating whether US AI technology is over-invested, with investors presenting increasing evidence analyzing the current high valuations of US stocks and the phenomenon of tech giants forming alliances and creating an investment closed-loop around AI.

However, from a sentiment perspective, compared to the dot-com bubble of 2000 or the 'Nifty Fifty' era, the current market appears more "rational." One explanation suggests that investors have become more cautious and astute due to painful lessons learned from the past. Yet, as Hegel once famously remarked, "The only thing we learn from history is that we learn nothing from history."

This implies that we are still some distance from a true AI bubble burst and a US stock market collapse.When a crisis genuinely looms, most investors tend to become even more optimistic. Conveniently, Nvidia, a crucial component in the AI investment closed-loop, just reported earnings that seem to once again affirm "all is well." Its Q3 revenue and gross margin once again surpassed expectations, coupled with optimistic guidance for the next quarter, allowing the market to breathe a collective sigh of relief.

So, beyond retail investors, how do the world's top investment institutions truly view the current US tech Magnificent Seven? Portfolio allocations reflect conviction; therefore, we have analyzed the latest quarterly 13F filings to help demystify the situation and understand the underlying truths.

Perspectives on Divergence Among Star Investors

Data Sources: Reuters, TradingKey As of: November 20, 2025 

Evidently, unlike the similar trend changes observed in Q2, global professional investors this quarter displayed significant contention and divergence regarding AI investments, specifically within the Magnificent Seven. Firstly, among foreign investors, Cathie Wood's ARK Invest, a prominent tech enthusiast, increased its holdings in six of the seven tech companies (excluding Apple) to varying degrees.

Conversely, Peter Thiel and Coatue, also leading tech stock investors, adjusted and reallocated their positions within the Magnificent Seven. Thiel initiated new long positions in Apple and Microsoft, while completely liquidating his Nvidia stake. Coatue, meanwhile, opened a new position in Google, simultaneously reducing exposure to Amazon, Tesla, and Nvidia. Point72, the rapidly growing hedge fund, also made significant portfolio shifts, increasing positions in Nvidia, Microsoft, and Meta (Facebook), while trimming its Amazon holdings.

Bridgewater Associates, following Ray Dalio's stepping down, and Baillie Gifford explicitly expressed concerns about the high valuations of tech stocks. They have collectively begun to retreat from the tech stock frenzy, not just from Nvidia, but by broadly reducing their holdings across the entire US tech Magnificent Seven. Furthermore, David Tepper, renowned as Wall Street's "king of bottom-fishing," also ceased his opportunistic buying and instead began to partially take profits. His firm, Appaloosa, reduced its exposure to four tech stocks, while increasing its Nvidia position.

Lastly, it is worth noting that Berkshire Hathaway, managed by the recently retired Warren Buffett, continued reducing its Apple holdings and made a historic move by purchasing Google for the first time; this is likely a strategic decision from the new leadership.

On the Chinese side, both Greenwoods and Hillhouse show optimism; the former added to four tech stocks but exited its Microsoft position, while the latter established a new position in Facebook and increased its stake in Google.

In summary, there is a growing divergence among global investment masters regarding their faith in U.S. tech giants. The tech race between China and the U.S. is set to continue, yet competition for capital among American tech companies has reached a fever pitch. Although they have begun to band together, hoping to reinforce ties through various collaborations, this is akin to a double-edged sword. Tightening business connections may help the weaker players weather the storm before a crisis, but once a crisis hits, scenarios of panic selling could lead to exponential losses.

A telling graphic illustrates this reality: many global stock markets have continued to set new highs over recent years, with standout markets such as Japan and South Korea benefiting directly from U.S. tech stocks, particularly Nvidia. Fortunately, Nvidia's recent performance has provided a satisfactory report, easing short-term market concerns.

Data Sources: Reuters, TradingKey As of: November 20, 2025 

Two Scenarios for U.S. Stocks

Finally, I would like to share my thoughts on the future trajectory of the overall U.S. stock market. The recent adjustments in U.S. stocks appear to stem from investors reflecting on the excessive short-term investments in AI and engaging in profit-taking actions. However, underlying this is a growing concern over liquidity, spurred by government shutdown possibilities and the anticipated pause in rate cuts in December. The Federal Reserve currently faces two potential scenarios:

Scenario 1: If the Fed refrains from cutting interest rates to maintain its policy independence, this would indicate a willingness to sacrifice near-term performance in the stock market to support the dollar and U.S. treasury bonds.

Scenario 2: Should the Fed signal a willingness to accommodate an interest rate cut in December, it would suggest that Powell favors sacrificing the dollar and treasury bonds while continuing to inflate the stock market, likely leading the U.S. economy into a state of stagflation with widening wealth disparity.

Short-term market feedback seems to favor Scenario One. The U.S. dollar index has reversed its previous downturn and is currently strengthening, poised to break through established resistance levels. However, I believe that the U.S. will likely opt for Scenario Two. The rationale is as follows:

1. American household wealth is deeply intertwined with US stock prices, particularly those of tech giants. If the bubble is allowed to burst in an uncontrolled manner, the economy will inevitably enter a recession, with consequences that are difficult to manage.
2. The Federal Reserve currently retains ample policy tools, and the US economy remains relatively healthy. Furthermore, the upcoming change in Fed leadership and the impact of next year's mid-term elections will likely strengthen expectations for the administration to maintain an accommodative environment and pressure the Fed to cut rates.
3. After the recent meeting between U.S. and Chinese leaders, both nations have entered a deeper phase of technological and economic competition, with technology and AI at the core. Deliberately puncturing the stock market bubble would essentially signify an admission of premature surrender.

Therefore, I personally believe that Scenario Two is the more likely outcome, foreseeing continued horizontal fluctuations in U.S. stocks at elevated levels. However, as mentioned, the market will experience pronounced fragmentation, especially among tech giants. 

On one hand, these companies will accelerate their collaborations, but on the other, heightened competition will arise due to the homogeneity of many services they offer, such as cloud services, large models, and advertising revenues. The market's capital will no longer tolerate faltering companies or tech enterprises that incur massive capital expenditures without profitability (as evidenced by a surge in short-selling and selling pressure on underperforming tech stocks). Instead, capital will increasingly gravitate towards industry leaders with more optimistic fundamentals and profitability outlooks. Ultimately, I expect a significant decline in the earning potential of U.S. stocks over the next year, while volatility will sharply increase.

Data Sources: Reuters, TradingKey As of: November 20, 2025