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Traders proceed to have absolute religion in AI, whereas I proceed to build up stakes in low cost FTSE 100 shares. So am I lacking out by not becoming a member of the occasion?
Peak cycle
I’m making a daring name: the Magnificent 7 – led by Nvidia – possible peaked on 29 October. That was the day when the inventory hit $5trn and Meta warned it could miss analyst revenue expectations resulting from hovering capital expenditure.
Three weeks later, Nvidia’s money flows additionally disillusioned. So why are the AI giants faltering?
Past sky-high valuations and restricted real-world breakthroughs, buyers are beginning to query sure industrial relationships, reminiscent of Nvidia backing smaller AI companies that later spend closely on its chips or cloud providers.
Is a reckoning coming for the Magnificent 7? I believe so. Basic boom-and-bust: overspend on new tech and occasion prefer it’s 1999. On the identical time, cheaper FTSE 100 shares supply extra grounded alternatives, setting the stage for buyers to discover extra sustainable bets.
Fallen large, rising potential
For me, one of the crucial compelling FTSE 100 progress tales proper now could be Diageo (LSE: DGE). I’ve watched the corporate for years, however solely not too long ago determined to step in. Its manufacturers are legendary – Guinness, Don Julio, Casamigos – and so they retain robust world enchantment.
What excites me is the enduring pattern of premiumisation. Customers could drink in another way immediately, however they nonetheless pay for high quality. The corporate is adapting effectively, shifting technique to replicate altering habits, from at-home socialising campaigns to ready-to-drink codecs geared toward youthful audiences.
Dangers stay. Shopper spending might keep constrained, stock cycles may persist, and world macro situations could weigh on near-term efficiency.
However with a ahead earnings a number of of simply 13 – effectively under its long-term common – I really feel the dangers are largely priced in. The 4.3% dividend is a bonus, however my focus is on robust manufacturers, and a possible turnaround from a cost-conscious new CEO. The rationale I maintain Diageo is that it now looks like a inventory with room to run, setting the stage properly for my subsequent decide.
Power large
For me, BP (LSE: BP.) is a standout contrarian alternative to think about. Everybody’s bearish on oil, however that’s precisely why I’ve been accumulating. Since its technique reset in February, scaling again pricey renewables initiatives, the corporate seems much more centered and disciplined.
Q3 outcomes highlighted this: refining exceeded expectations, supported by greater realised margins and minimal turnaround exercise.
In upstream, the venture pipeline is spectacular – 12 discoveries in 2025 alone, together with Bumerangue in Brazil, its largest discover in 25 years.
Money movement is powerful, with working money movement comfortably masking the 5.6% dividend yield.
BP’s break-even is $40 a barrel. But when costs stay within the $60 vary long run the corporate could miss its bold monetary targets, which might hit the share value and shareholder returns.
Power seems mispriced immediately, for my part. Geopolitical tensions, US onshoring, rising electrical energy demand from AI, and slower EV adoption all help the case for oil and fuel.
Backside line
For me, the fun is find undervalued FTSE 100 shares. Whereas hype drives others towards costly names, I deal with high quality corporations buying and selling cheaply, providing long-term progress, stable dividends, and the potential for regular wealth compounding over time.
