Coronation Fund Managers, which oversees $47 billion in assets, is cutting its positions in two of the world's biggest AI chip makers — TSMC and SK Hynix — and pouring more money into Indian equities. The move is driven by what the firm sees as stretched valuations in stocks that have ridden the artificial intelligence wave.
Why the shift is happening
AI-related stocks have soared over the past year, pushing price-to-earnings ratios to levels that Coronation's investment team considers unsustainable. TSMC and SK Hynix, both key suppliers to Nvidia and other AI chip designers, have been among the biggest beneficiaries. But Coronation isn't betting on a continued rally. Instead, it's rotating capital toward Indian markets, where the fund sees better risk-reward.
The valuation concern
Stretched valuations in AI stocks aren't a new worry, but Coronation's decision to trim specifically at TSMC and SK Hynix signals a conviction that the current pricing already reflects years of expected growth. The fund isn't selling out entirely — it's trimming, not exiting. But the shift is notable given the size of its holdings and the prominence of these two names in the AI supply chain.
What India offers
Indian equities have been a bright spot for global investors, buoyed by strong domestic demand, a young population, and reforms that have improved corporate profitability. Coronation is increasing its exposure there, though the firm didn't specify which sectors or stocks it's buying. The move fits a broader pattern of emerging-market funds rotating away from overvalued tech and into markets with more room to run.
The fund's rebalancing comes as some analysts question whether the AI trade has peaked. Coronation's bet is that India's growth story offers a more sustainable path — at least for now. The next quarterly portfolio update will show how deep the cuts at TSMC and SK Hynix go, and whether other fund managers follow suit.
