AI, gold and banks fuel rally detached from reality

Binaya Dahal

Journalist

21 July 2026

Datt Capital’s Daniel Liptak says the recent share market rally has moved ahead of fundamentals, with investors concentrating capital into artificial intelligence, gold and bank stocks based on sentiment rather than earnings growth.

The Melbourne-based fund manager’s head of distribution said major market indices have been lifted by a narrow group of popular themes, pushing valuations beyond what underlying business performance could justify.

“Gold miners almost tripled by February before giving back a third of their value. Banks peaked shortly after, driven more by valuation expansion than earnings growth. CBA was the clearest example,” Liptak said.

“Valuations were being driven by fear of missing out, not by business results.”

Gold’s influence has become particularly significant in the small-cap market, where miners now represent about 17% of the index, around three times their usual weighting. As gold prices declined, the sector’s reversal dragged the broader small-cap market lower.

Liptak said artificial intelligence was another example of investors pricing in future potential before companies had demonstrated the returns needed to justify large-scale investment.

“The AI build-out is now starting to weigh on the earnings of established businesses,” he said.

“The market is becoming more uncertain about whether the investment will ultimately deliver the returns expected. When both the winners and losers of a boom begin falling together, it is often a warning sign.”

The shift has led major Australian superannuation funds to reassess their exposure to crowded investment themes, with some reviewing portfolios for risks linked to concentrated positions in areas such as AI.

“AustralianSuper, Australia’s biggest superannuation fund, has been shifting toward assets it views as more defensive than global equities as the AI theme matures, stating that future returns must come from earnings growth rather than further re-rating,” Liptak said.

“Aware Super has separately disclosed it is reviewing its portfolio for hidden AI exposure, concerned that its true concentration in the theme extends well beyond the headline numbers.”

Liptak warned that investors heavily exposed to broad market indices may face greater risks as benchmarks become increasingly dominated by expensive, popular stocks.

“Over the past five years, the ASX 100 has gained more than 20 per cent, while the Small Ordinaries have gone nowhere,” he said.

“Capital has moved towards the most expensive parts of the market and away from areas offering greater value.”