Published by Global Banking and Finance Review
Posted on November 14, 2025
By Iain Withers and Tommy Reggiori Wilkes
LONDON (Reuters) -The explosion in the value of artificial intelligence stocks poses risks to global markets for which there is "no playbook", the CEO of Deutsche Bank's 1.1 trillion euro ($1.3 trillion) money manager DWS told Reuters, amid growing concerns that the sector is in a bubble.
The AI stocks frenzy has drawn comparisons with the 1990s dotcom boom and bust, but DWS's Stefan Hoops said the recent rally was different as it was being driven by everyday retail investors – not institutions – and they had yet to be tested.
The so-called 'Magnificent Seven' - including Nvidia and Meta - have seen their share prices soar, fuelling fears about the scale of market exposure to just a few names. Technology firms are among the stock market's big fallers in recent days, although they are still well up on the year.
Frankfurt-based DWS is examining whether the boom could unravel at a faster pace, Hoops said in an interview on Thursday, adding that the many retail investors sitting on big gains on stocks such as Nvidia could be quick to sell if sentiment soured.
While institutional investors studied traditional metrics to assess if stocks are overvalued, retail investors often do not and many 'buy the dip' when there are declines, Hoops said. How they would behave during a sustained drop was unknown, he added.
DRUMBEAT OF WARNINGS ABOUT POTENTIAL AI BUBBLE
"There's no playbook, there's no real history for something like that," Hoops said at DWS's London office.
"What's happening is this most amazing wealth creation (for retail investors)... Nvidia stock is now worth $5 trillion. My question is simply, could it go to $100 trillion? Or would at some point you be the first one to say, 'You know what, this is getting shaky?'"
The German giant believes AI will transform industries and Hoops did not predict a tumble, but said more evidence was needed beyond efficiency gains to sustain lofty valuations.
Amid a drumbeat of warnings about a potential AI bubble, the CEOs of Morgan Stanley and Goldman Sachs have cautioned in recent weeks that equities could be heading for a drawdown.
AI-related stocks have accounted for 75% of the S&P 500's returns since OpenAI launched ChatGPT in November 2022, JPMorgan's investments arm calculates. U.S. retail investors' share of wealth in equities is at its highest level in at least 75 years, Capital Economics has said.
DWS still "loves" the data centre sector - which serves AI-driven demand for computing power - and will invest in more built assets, Hoops said, adding it was selling its stake in data centre fund NorthC as it had matured and the time was right.
REINVIGORATING EUROPEAN GROWTH
Hoops has largely won over investors with a three-year turnaround at DWS – shares are up about 80% over his tenure – after being parachuted in from Deutsche Bank following a damaging greenwashing scandal.
DWS's growth has been powered by inflows into passive platform XTrackers, while it is seeking to boost a more mixed performance across its active funds and private assets units, including through a credit tie-up with parent Deutsche Bank.
Recent U.S. credit wobbles are not a big cause for concern, Hoops said, but are a "wake-up call" for those piling into asset-backed lending that relies on less solid collateral.
DWS's record net inflows of 40.5 billion euros over the first nine months of this year partly reflected some overseas investors diversifying away from the U.S., Hoops said, although he added European governments needed to do more to boost growth.
"A lot of good work is happening, but we now also need to get on with it," Hoops said, adding he supported calls including from German Chancellor Friedrich Merz for a pan-European stock exchange but thought it would be tough going.
($1 = 0.8575 euros)
(Reporting by Iain Withers and Tommy Reggiori Wilkes, Additional reporting by Naomi RovnickEditing by Gareth Jones)
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