AI Valuations Look Elevated, but Fundamentals Support Growth

Nuveen’s CIO Weekly Commentary (8 September 2025), led by Saira Malik and the Global Investment Committee, reviews labor market weakness, Fed policy prospects, and AI-driven equity valuations.

• Labor data: U.S. job openings hit post-2021 lows, unemployment rose to 4.3%, and payroll growth undershot expectations—sharpening the Fed’s case for a September rate cut.

• Tech sector: AI stocks trade at a 30% premium to historical averages, but unlike the dot-com era, robust earnings and massive capex provide support.

• Outlook: AI infrastructure and cybersecurity remain key secular beneficiaries, with double-digit earnings growth expected through mid-2026.

How should investors balance rate cuts with lofty valuations in AI-driven sectors? The full commentary explores the trade-offs.