Global equities investors are facing one of the most complex valuation environments in recent memory as rapid advances in technology and artificial intelligence challenge long-held assumptions about how value is identified, measured and priced.
InvestmentMarkets CEO Darren Connolly said the acceleration of structural change means investors must look far more critically at where long-term value is truly being created. He noted that technological disruption is reshaping outlooks for individual companies and entire industries. “There is a clear need for investors to continue to interrogate the assumptions that sit beneath valuations,” Connolly said. “Periods of rapid change and disruption tend to create both mispriced pessimism and mispriced optimism, and being able to distinguish between the two is important.”
This sentiment is echoed by Simon Raubenheimer of Contrarius Investment Management, who said traditional valuation screens often overlook critical qualitative signals in companies undergoing technological or business model transition. “Some of the best opportunities sit where the market feels least comfortable,” Raubenheimer said. “Misunderstood transitions, business model shifts and industries assumed to be in decline can all look very different when you assess them from a different perspective.”
He pointed to The New York Times as an example. During its years of declining print revenues from 2006 to 2011, the stock screened poorly on every conventional metric, leading many value, growth and quality investors to dismiss it. However, a deeper review revealed a fast-growing digital subscription business with attractive economics and a global market opportunity that was not captured in quantitative screens. “It was tiny, buried inside the numbers, but transformative,” Raubenheimer said. “Once the market recognised what was happening, the share price recovered dramatically.”
As AI becomes a larger driver of competitive advantage and industry shifts, Raubenheimer said the more relevant question for investors is not whether AI is in a bubble, but whether its long-term impact is still being underestimated. “We think this is one of the most profound shifts in decades. Many of the companies that will benefit are trading at valuations that don’t fully reflect the scale of what’s unfolding.”
He added that disruption cuts both ways. Low valuations alone do not signal safety when structural decline threatens long-term earnings durability. “Historical earnings strength doesn’t guarantee future durability,” he said. “Understanding which businesses are genuinely resilient – and which are vulnerable – requires deeper analysis than price multiples alone.”
Raubenheimer also noted that elevated volatility is adding to confusion in markets, with investors often interpreting price swings as fundamental deterioration. In many cases, he said, volatility is simply a feature of periods marked by innovation and capital rotation. “A sharp drop in sentiment doesn’t always alter a company’s long-term value. It can simply bring the price back to a level where it becomes attractive again.”
Looking over the past decade, Raubenheimer said one of the core lessons for investors is to resist the draw of pessimism. “Pessimism is intellectually seductive but financially unhelpful,” he said. “The best investors tend to be those who remain optimistic about long-term progress, even when the short-term noise is overwhelming.”
Connolly said the task for investors now is to develop a clear-eyed view of how technology is reshaping markets. “Today’s environment really demands a clear eyed view – understanding what is changing, what is not, and where long-term value is actually being created,” he said. “That’s the conversation investors need to be having with themselves as we move into 2026.”
