The debate over whether Wall Street's rally is supported by fundamentals continues to divide market experts. While many investors believe strong corporate earnings and the artificial intelligence (AI) boom justify record-high valuations, Andrew Freris, CEO, Ecognosis Advisory remains firmly unconvinced.In an interview with ET Now, Freris argued that earnings have not kept pace with soaring valuations and warned that excessive enthusiasm around AI investments could eventually trigger a significant correction in US markets. He believes investors should remain cautious on American equities while favouring selected Asian markets such as Japan, Singapore, Taiwan and South Korea.AI optimism has overshadowed weak fundamentalsRejecting the view that stronger earnings justify the rally, Freris questioned whether several of the biggest market leaders have delivered profits that warrant their lofty valuations."I am afraid I have to disagree completely that earnings growth has been good. The earnings growth of the SPX—the most important stock—for 2025 has had no earnings at all. They had no profits, and in the first quarter they continued to have losses. And this is one of the key stocks that drives the economy. If that is good news on earnings, well, then I stand to be corrected," he said.Freris said he shares the concerns expressed by the Bank for International Settlements (BIS), arguing that excessive borrowing and repeated fundraising by major companies point to financial excess rather than sustainable growth."I do believe, like the BIS (Bank for International Settlements), that all this is going to end badly. I have seen absolutely nothing. Particularly after the SPX raised over $70 billion—I have forgotten the exact number—with additional write-ups. They came back again for an additional loan. What do you mean they had not thought of that before? It is so irresponsible, so naïve, and so amateurish that I fail to see how people can possibly carry on holding their shares with them. But never mind—not my problem, their problem," he said.Asia remains the preferred investment destinationDespite his concerns over global markets, Freris continues to see opportunities across Asia, though he believes even some of the region's strongest performers are increasingly riding the AI investment wave.Taiwan and South Korea have delivered exceptional returns, while Singapore and Japan have also posted relatively strong performances. However, he questioned whether massive AI spending plans will ultimately generate sufficient demand."The spectacular performers were, of course, Taiwan and South Korea. But they were also at the back of a big boom in artificial intelligence. Now Korea has joined the dance with $1 trillion of spending on artificial intelligence investments. Really? They have not told us who is going to buy the products that $1 trillion is going to produce. Once again, I fail to see that," he said.Freris also questioned why investors continue to favour US markets despite several international markets outperforming them."If I told you that I advised my clients at the beginning of the year to buy one market and now they are making 8% in US dollar terms, you would probably tell me I deserve a Nobel Prize. Yet the S&P is one of the least best-performing markets in the world, and still people carry on buying it. Why? I have absolutely no idea," he said.He remained sceptical of investors pouring money into companies that continue to report losses."How can you buy a company that makes losses and carry on pumping money into that company on the expectation that it will not make losses? I do not want to sound too naïve or too crude, but after all these years in the markets, I really cannot believe my eyes. But anyway, it is not my money—it is their money," he said.Japan stands out within AsiaAmong Asian markets, Freris believes Japan offers one of the most balanced investment opportunities.He cited the country's relatively healthy economy, disciplined monetary policy and increasing defence expenditure as supportive factors."Japan has a reasonably good economy. It has quite a safe central bank, which is going to increase interest rates because they do not like inflation, and this is likely to boost the yen a little. They are spending more overall, but they have not gone crazy on artificial intelligence, and that is important. They are also spending a lot on defence, and defence is always one of my favourite sectors. So yes, I would add Japan to my favourites as far as Asian markets are concerned," he said.India lacks a strong market triggerOn India, Freris described the market as stable but lacking a clear catalyst capable of driving significant outperformance.He also suggested that India's relatively limited exposure to the AI investment frenzy has become a disadvantage from a market perspective, even though he personally views that restraint positively."India, I am afraid, is a market that has no good news, no bad news, and hence that is reflected in an incredibly flat overall performance. I would like to think of something that has been taken in the policymaking of India, and I cannot find any," he said."Very unfairly, the Indian market has been accused of not having an artificial intelligence sector. Good luck to India that it has not joined this kind of crazy business of just spending money because it looks as if it is a good idea. But unfortunately, this is not what drives the market right now," he added.US bubble could trigger a global correctionFreris maintained that he continues to advise clients to reduce exposure to US equities, warning that any sharp correction on Wall Street would inevitably spill over into global markets."I remain exactly the same. I am telling my clients not to add and to continuously reduce their holdings in all US markets, not just one, because once the bubble bursts, it is going to take down everybody," he said.Emerging markets likely to suffer initiallyFreris expects any correction in the US to create a temporary sell-off across emerging markets, including India, even if their fundamentals remain intact."Once the American market caves in, everybody caves in as well. I have no idea why, if the S&P goes down by 10% in a couple of days, you should sell the Sensex. What does the Sensex have to do with the S&P?" he said.However, he believes the panic would eventually subside."Everybody is going to get hit until things settle down. Then people will realise that not everybody has been spending money on artificial intelligence, and there is no real reason to sell those companies. I suspect that within three months of the cave-in, we will be back in a relatively settled situation, but with the United States in a very different position," he said.Freris concluded by cautioning that retail investors chasing AI-driven momentum could face painful losses if the bubble eventually bursts, drawing comparisons with previous speculative episodes in cryptocurrencies and other asset classes.