Should you invest in AI stocks now? Nvidia’s slump, Anthropic’s IPO and 5 strategies to consider

The AI trade is sending two very different signals this week!

Nvidia Corp. stock notched its worst week in more than 18 months, as its share price continued to reel after Jensen Huang’s ouster from the top chipmaker. The stock fell 2% to close at $162.85 Friday, extending losses over the last five trading days to 13%, the worst weekly decline since April 2025.

On the other hand, Anthropic PBC's proposed initial public offering (IPO) has attracted six times the orders for the shares available. The company is looking to raise up to $64.4 billion through the public offering, alongside a $26 billion private placement. The combined offering would be bigger than SpaceX's IPO, making it the largest listing of all time.

The contrasting developments raise questions about the sustainability of the AI rally and what investors should consider as the sector enters its next phase.

AI investors are becoming more selective

The developments do not necessarily signal that investors are abandoning artificial intelligence. Instead, they are becoming more selective about where they put their money.

Anthropic's annualised revenue run rate has risen from around $65 billion in July to approximately $81 billion by October. Its first-half revenue reached $16.3 billion, compared with just $1.16 billion in the same period last year. According to Jain, this demonstrates the growing commercial demand for AI products and services.

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At the same time, AI investment cycle is broadening. “Investors are looking beyond chipmakers and infrastructure providers towards companies building AI models, applications and businesses that can generate recurring revenue from the technology.”

However, he cautioned that rapid revenue growth does not automatically translate into profitability. Anthropic's proposed valuation of around $1.4 trillion is below some earlier expectations and represents a substantial premium to its current revenue base. Its filings also show significant operating losses.

He also pointed to the interconnected nature of the AI ecosystem. “Nvidia is both a major technology supplier to Anthropic and a proposed $10 billion investor in its private placement. These relationships are not necessarily a problem, but they do mean that financial and operational risks can travel across the ecosystem.”

Should investors continue investing or rein in exposure?

Jain said neither panic nor euphoria is the right response. AI demand is real, but valuations in parts of the sector already assume substantial future growth.

"Investors with concentrated exposure to AI-related stocks should consider rebalancing. Those with limited exposure can build positions gradually rather than chasing a single IPO or reacting to short-term market movements," he said.

Five investment strategies to consider

First, understand your existing exposure. AI investments are not limited to chipmakers. Technology funds, semiconductor companies, cloud platforms and large-cap equity indices may already have significant overlapping exposure.

Second, stagger investments over the next three to six months. In a market with elevated valuations and volatility, disciplined entry is generally more sensible than trying to identify the perfect price.

Third, prioritise diversification. Avoid concentrating your entire AI allocation in a single company or a narrow segment of the market. Look across infrastructure, software, platforms and businesses that are actually monetising AI.

Fourth, don't chase the Anthropic listing. Six-times oversubscription indicates strong demand, but it does not guarantee listing gains or make the proposed valuation attractive. Let the market establish a price before making investment decisions.

Finally, avoid excessive leverage. AI is a long-term investment theme, but short-term volatility can be unforgiving when positions are financed with borrowed money.

What should Indian investors do?

For Indian investors looking to access overseas technology markets, the Liberalised Remittance Scheme permits resident individuals to remit up to $250,000 per financial year for permitted transactions. Applicable tax collected at source (TCS) provisions and currency conversion costs should also be factored into investment decisions.

"AI will remain one of the defining investment themes of this decade. But the next phase of the rally may not reward every company equally," Jain said.

"The opportunity is still there. The key is to distinguish between companies benefiting from the AI narrative and companies building sustainable businesses around it.