LIVE MARKETS-AI boom may already have peaked

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AI BOOM MAY ALREADY HAVE PEAKED

Investors fretting over whether the recent selloff in AI-linked stocks is a buying opportunity should think twice, according to Arthur Budaghyan, Head of CoreMacro at BCA Research, who argues the risks look skewed to the downside.

Budaghyan says the economics underpinning the AI spending boom remain highly uncertain, even as companies continue to pour big money into data centres and computing infrastructure. The key problem, he believes, is that nobody really knows what future demand for AI services will look like or what customers will ultimately be willing to pay.

"Critically, nobody knows how much compute will be needed in two or three years, or the price final users will pay for it. In other words, the demand curve is unknown," Budaghyan writes in a Wednesday note.

Budaghyan sees only a one-in-three chance of an AI "Goldilocks" outcome. The greater risk, he argues, is either a glut of computing capacity that crushes returns or an "AI stagflation" scenario in which insufficient buildout keeps compute expensive and chokes off demand.

He recommends investors avoid or underweight equities, arguing that widening weakness beyond technology shares is an early warning sign.

"The bull market's last hurrah may already be behind us."

(Danilo Masoni)

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