What is the impact of the differentiation of US technology stocks and the weakness of European stocks on the global market?

Recently, the global financial market has continued to fluctuate. The three major indexes of the US stock market showed mixed performance, with significant differentiation in the performance of technology stocks, and intensified volatility in leading stocks such as Tesla and Nvidia; European stocks generally fell, dragged down by weak economic data and geopolitical risks. This phenomenon reflects the structural contradictions and risk appetite adjustments in the global capital market.

The recent intensification of volatility in US technology stocks is essentially a market rebalancing between high valuations and sustainable performance growth. Taking Tesla as an example, its stock price plummeted by over 8% in a single day in February 2025. Despite reaching a historic high in delivery volume in 2024, the "slight growth" target was not achieved, coupled with intensified competition in the electric vehicle market, leading investors to lower their 2025 delivery expectations from 9 million vehicles to 8.5 million vehicles. At the same time, as a core supplier of AI computing power, Nvidia has benefited from long-term investment in AI infrastructure, but is facing short-term inventory adjustment pressure. In May 2025, its stock price fluctuated by over 5% in a single day after the release of its financial report, reflecting market concerns about the slowdown in its data center business growth.

The other side of the differentiation of technology stocks is the market's emphasis on "eliminating falsehood and preserving truth" in the AI industry chain. As a core contract manufacturer for chip giants such as Nvidia and AMD, TSMC's AI related revenue is expected to exceed 20% by 2025, and its stock price is expected to rise by over 30% this year, highlighting the market's recognition of the underlying logic of hard technology. By comparison, Meta、 Google and other tech giants that rely on advertising revenue have seen their stock prices weaken due to macroeconomic uncertainty leading to shrinking advertising budgets. This differentiation indicates that investors are shifting from "chasing concepts" to "verifying performance", and the valuation system of technology stocks is facing restructuring.

The widespread decline in European stocks is the result of the resonance between economic fundamentals and geopolitical risks. According to the latest forecast by the International Monetary Fund (IMF), the economic growth rate of the Eurozone in 2025 will only be 0.8%, far lower than that of the United States (2.3%) and China (4.5%). The manufacturing PMI has been below the boom bust line for four consecutive months, and industrial output in core economies such as Germany and France continues to shrink. According to the business forecast survey by the Japanese Cabinet Office, the confidence index of large enterprises in the Eurozone has dropped to negative 1.9, and the confidence index of the manufacturing industry has fallen to negative 4.8, hitting a new low since 2020.

Geopolitical risks have further exacerbated the vulnerability of European stocks. The Russia-Ukraine conflict continues to drive up energy prices. Although the natural gas reserve rate in Europe has reached 90%, the peak demand in winter may still cause price fluctuations. In addition, the threat of tariffs from the United States on European industries such as automobiles and steel has led to a dual pressure of cost and market for European export companies. Although the European Central Bank has kept interest rates unchanged, President Lagarde has made it clear that if the economy continues to weaken, there is limited room for interest rate cuts, which further undermines market confidence in European stocks.

The differentiation between US and European stocks is essentially a rebalancing of global capital flows. On the one hand, the expectation of the Federal Reserve cutting interest rates has risen (CME FedWatch tool shows a 59% probability of a rate cut in September), driving funds from the bond market back to the stock market. However, the high valuations and uncertain performance of technology stocks have led funds to shift towards defensive sectors. On the other hand, Europe's economic stagnation and geopolitical risks have prompted international capital to accelerate its withdrawal from European stocks and invest in safe haven assets such as US treasury bond bonds and gold. Since June, the US dollar index has broken through 105, and the euro dollar exchange rate has fallen below 1.07, hitting a new low since 2023, reflecting the poor expectations of global capital for the economic prospects of Europe and the United States.

It is worth noting that emerging markets are becoming a new choice for global funds. After the World Bank lifted the financing ban on nuclear energy projects, nuclear power investment in developing countries has entered an explosive period. Countries such as India and Indonesia plan to build 20 new nuclear power plants in the next five years, and the stock prices of related industry chain enterprises have risen by more than 50% this year. In addition, the popularization of carbon pricing mechanisms (with 80 mechanisms operating globally, covering 62% of economic output) has promoted the valuation of sectors such as clean energy and carbon capture technology, becoming a new favorite of global capital.

Looking ahead to the future, the differentiation of US technology stocks may continue, but hard technology fields such as AI and semiconductors still have long-term investment value. The weakness of European stocks requires attention to signals of the European Central Bank's monetary policy shift and the easing of geopolitical risks. The global market will enter a new normal of "high volatility, low growth", and investors need to find a balance between structural opportunities and systemic risks. For ordinary investors, reducing reliance on a single market, diversifying their allocation of emerging markets and safe haven assets, or responding to the current market environment are rational choices.In an era of increasing uncertainty, only by maintaining reverence for fundamentals can we capture true value amidst fluctuations.