Business · Markets · 2 hrs ago
Morningstar CEO warns investors may underestimate AI stock risks
Morningstar CEO Kunal Kapoor warned that investors may be underestimating risks in AI stocks.
He said markets expect companies’ heavy AI spending to quickly bring higher revenue, profit margins and productivity.
Those gains may take time and may not arrive in a straight line, he said.
A small group of AI-linked companies has driven much of the market’s gains, leaving global markets more dependent on their results.
Kapoor said Indian stocks remain expensive even though the country’s economy and growth prospects are attractive.
Sustained high oil prices could weigh on Indian companies’ earnings and investor confidence.
He said gold can help diversify a portfolio, but is not a growth asset, and that investors should generally keep its share modest.
Morningstar CEO Kunal Kapoor warned that investors may be underestimating the risks of concentrating investments in artificial intelligence stocks.
He said the biggest risk is that investors expect AI spending to boost company earnings too quickly.
Gains concentrated in a small group of AI-linked companies make global markets more dependent on a limited set of outcomes, he said.
Kapoor also said Indian equities remain expensive despite underperforming global markets over the past two years.
He said gold can diversify a portfolio but should not be treated as a growth asset.
- Who
- Kunal Kapoor, chief executive officer of investment research firm Morningstar.
- What
- He warned that investors may be underestimating risks from concentration in AI stocks and overly optimistic expectations for earnings growth.
- When
- The remarks were made in an interview during a recent Mumbai visit. The article was published on October 27, 2026.
- Where
- The interview took place during Kapoor’s visit to Mumbai, India.
- Why
- Kapoor said investors may expect AI investment spending to translate into revenue, higher margins and productivity faster than it will.
This story does not have two clearly opposing sides.
Foreign portfolio investors have remained net sellers of Indian equities since this month.
Foreign portfolio investors sold Indian equities worth ₹4.55 lakh crore during the year.
Kapoor’s remarks were reported in an article published on October 27.
- AI stocks
- Kapoor warned of growing concentration in a relatively small group of AI-linked companies.
- India equities
- Foreign portfolio investors sold ₹4.55 lakh crore of Indian equities in 2026.
- October FPI sales
- Investors net sold ₹51,466 crore of domestic equities so far in October.
- Brent crude
- The global benchmark was hovering around $115.06 per barrel.
- Gold
- Kapoor described it as a portfolio diversifier, not a growth asset.
What people are saying
The biggest risk is not that AI fails. It's that investors have become too optimistic about how quickly the benefits translate into company earnings
That may happen, but rarely in a straight line
India isn't cheap despite the underperformance vs global markets over the past two years.
Gold has benefited as investors have looked for protection from uncertainty. But its role in a portfolio has not changed: it is a diversifier, not a growth asset.