At a time when global investors are debating whether US technology giants are entering bubble territory, PPFAS Mutual Fund CIO Rajeev Thakkar offered a firm, data-backed defence of America’s ‘Magnificent Seven’. Speaking at the fund house’s annual shareholder meeting in Mumbai on November 22, Thakkar said the top US tech platforms continue to generate exceptional cash flows, which justify their current valuations even amid the ongoing AI frenzy.

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NVIDIA’s dominance is not risk-free ‘This is no Nifty Fifty bubble’

Thakkar drew a clear distinction between established US tech giants—such as Alphabet, Meta, Amazon and Microsoft—and the newer generation of AI startups. “These are businesses which earn a huge amount of cash flow,” he emphasized, noting that many AI upstarts are still in the cash-burn phase, where revenues fall short of massive capital expenses. He specifically mentioned OpenAI as an example of a company still far from generating sustained profits.

NVIDIA’s dominance is not risk-free

Thakkar also addressed the growing investor excitement around semiconductor stocks. While acknowledging NVIDIA’s leadership in AI chips, he cautioned that its margins depend heavily on the cyclicality of the semiconductor market. “NVIDIA is dependent on the chip cycle… margins can break,” he said, pointing out that hyperscalers are already developing their own AI chips. If this trend accelerates, NVIDIA could face declining demand from some of its biggest customers.

‘This is no Nifty Fifty bubble’

Responding to comparisons with the Nifty Fifty era of the 1970s—another period when investors crowded into a handful of top companies—Thakkar dismissed fears of a similar valuation bubble today. He said current multiples of 20–30 times earnings remain far below bubble levels, especially considering the strong balance sheets of US tech leaders. He added that Berkshire Hathaway’s recent $5 billion investment in Alphabet further supports the idea that valuations remain reasonable.
“If it were Nifty Fifty kind of valuation, one wouldn’t expect Berkshire to create a fresh investment there,” he argued.

Also Read: Sensex Settles 550 Points Lower From Day’s High, Nifty Ends Near 25,950 as Market Declines Deepen

PPFAS maintains strong US tech exposure

PPFAS Mutual Fund has long maintained exposure to US tech companies through its flagship Flexi-cap Fund. As of October 2025, the fund had 11% of AUM in overseas stocks, with allocations led by Alphabet (3.75%), Meta Platforms (2.70%), Microsoft (2.68%) and Amazon (2.37%).

This strategy has paid off. The Flexi-cap Fund continues to be one of the top-performing schemes, delivering:

7.69% YTD returns
10.81% one-year returns
22.05% five-year annualized returns
18.47% ten-year annualized returns

The fund manages an AUM of ₹1.25 lakh crore.

PPFAS has also received approval to launch two passive overseas funds from GIFT City — the Parag Parikh IFSC S&P 500 FoF and Parag Parikh IFSC Nasdaq 100 FoF, giving Indian investors direct access to US equities.

China’s ‘cheap’ stocks come with hidden risks

While the US remains a favoured destination for PPFAS, Thakkar issued a strong warning on China. Despite Chinese equities trading at historically low valuations, he said the risks outweigh the upside.
“You would rather be safe than sorry,” he remarked.

Thakkar highlighted three major concerns:

Governance risks:
The Ant Financial spin-off—conducted without shareholder consent—was cited as a major red flag.
Restrictions on foreign ownership:
Multiple sectors limit foreign investors, reducing transparency and control.
ADR structures:
“The owners of these ADRs have no voting rights or business interest in the actual operating company,” he warned, noting that investors are essentially buying a contractual claim rather than a real equity stake.

Given these uncertainties, Thakkar said PPFAS prefers investing in US or Europe-domiciled multinationals, which offer global exposure without regulatory surprises or unpredictable government actions.

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