LIVE MARKETS-Until the AI wave crashes 

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UNTIL THE AI WAVE CRASHES

Bond markets, the Iran war, and AI are dominating – but, in a BofA Global Research report, strategists said AI is by far the theme clients speak about the most.

“During our recent marketing trips to the US, Switzerland and Scandinavia, 80% of discussion time was spent on the AI capex boom, 15% on rates and 5% on the conflict in the Middle East,” they said.

But being the hottest topic of conversation doesn’t equal blanket enthusiasm.

BofA said clients shared its concerns that competition in AI models could push prices lower, raising doubts about whether the huge infrastructure spending can generate sustainable returns.

But despite some boom-to-bust worries, it seems the AI wave will be ridden out, especially as there are few signs of the AI capex cycle turning imminently.

“Most clients stated that they planned to stay positioned for a continued AI capex ramp-up in the near term, highlighting that failing to do so would entail significant career risks.”

They are, however, keeping their guard up – “many suggested that they were prepared to switch positioning on any signs that the boom was starting to run out of fuel.”

(Sophie Kiderlin)

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