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IrelandMontgomery warns cheaper AI shares may still be overpriced
The Australian investor sees risks beyond falling share prices, from excess data-centre capacity to a squeeze on big tech's profits.
AustraliaStory of Why this story? One of ABC News (Australia)'s most watched videos since yesterday, with 44,636 views.
ABC News (Australia): The news division of the ABC, Australia's public broadcaster. 2.6M subscribers and 1.7B views.
Skeptical investors sell off tech stocks as NASDAQ nosedives | ABC NEWS
Things we can learn from the video
Press to jump
- 0:13Montgomery compares the sell-off with earlier technology booms, when enthusiasm encouraged excessive investment.
- 1:14He argues that overpricing and over-expansion produce excess capacity, weakening returns on capital.
- 2:13Texas data-centre expansion faces disputes over labour, electricity demand, water resources and utility costs, he says.
- 3:10Direct AI competition between big technology companies threatens their margins and cash flows, Montgomery argues.
- 4:48He says technology valuations remain inflated despite the falls and suspects the correction has further to run.
- 5:30For Australia, he predicts money rotating towards undervalued non-technology and defensive shares.
A sharp fall in technology shares does not necessarily make them cheap. That is Roger Montgomery's warning as investors reassess the spending and promised returns behind the artificial-intelligence boom.
Speaking from Sydney to Australia's Australian Broadcasting Corporation (ABC), the Montgomery Investments investor argues that the sell-off follows a familiar technological cycle: enthusiasm pushes company valuations higher, businesses expand aggressively, and excess capacity eventually weakens the returns on all that investment.
In this case, he points to data centres. His concern is not simply that investors paid too much for shares, but that companies have built too much infrastructure for the returns they can achieve. The broadcast displays a Nasdaq chart showing a decline of about five per cent over five days, rather than a single trading session.
Montgomery also questions whether the biggest technology companies can retain the advantages that made their existing businesses so profitable. As the large cloud-computing operators compete directly with one another in AI, he argues, their spending rises while margins and cash flows come under pressure.
Asked whether valuations remain inflated after the falls, he answers: "Well, they certainly were. They're less inflated now, but they're still inflated." He suspects the correction has further to run.
The interview also examines political obstacles following the US midterm elections. In Texas, Montgomery points to disputes involving union labour, electricity demand and water use, including concerns about the effect of data centres on utility prices. He presents these as practical constraints on expansion, not merely shifts in market sentiment.
For Australian investors, his expectation is a rotation rather than an indiscriminate retreat: money moving away from expensive AI-related technology companies towards businesses outside technology and defensive shares that he considers undervalued.
A US stock market index covering nearly all shares listed on the Nasdaq exchange. Its largest non-financial companies account for about 80% of its weighting.
More on Wikipedia ›The November 3, 2026 elections contested all US House seats and 35 Senate seats, alongside state and local offices. Democrats won majorities in both chambers of Congress.
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Where next?
- Channel
- ABC News (Australia)
- Subscribers
- 2,640,000
- Channel views, last 7 days
- 13,178,225
- Channel views, pace per day
- 2,608,704 (on a normal day: 1,478,465)
- Video published
- November 6, 2026
- Video views so far
- 54,663 (less than a day online)
- Video views, pace per day
- 44,683
The numbers
The interview drew roughly 45,000 views since yesterday, placing it among Australia's most-watched new news videos.
💡 Test your knowledge
Which country's stock market does the presenter ask about near the interview's end?
The presenter asks how the technology sell-off could affect the Australian stock market.