AI
Copper prices are being lifted by strong AI hardware stocks, despite weak Chinese industrial activity. Semiconductor stocks are up around 70% over the past year, while Chinese industrials are down around 15%. Copper sits between the two, having gained about…
This week’s selloff in neocloud providers is not yet a major warning sign for tech stocks overall. CoreWeave, a US neocloud provider, sold off aggressively on Wednesday, declining over 15% on the day. The stock recovered somewhat on Thursday, as did our…
AI capex is supporting the global economy but also generating collateral damage for rate-sensitive sectors such as housing, as well as highly indebted governments. Maintain a benchmark allocation to equities for now and look to get more defensive next year.
The US Q3 earnings season is about to begin. The stock market is priced for robust earnings growth over the coming year and will react poorly to any signs of tech-related earnings disappointment. A sector breakdown of US and global ex-US earnings growth over…
US data center construction is booming at an exponential rate, but cost and labor constraints could slow the pace of spending next year. Spending on data centers exceeded spending on general and financial office construction last year. Earlier this year it…
US bonds will likely continue selling off until tighter financial conditions – most plausibly a double-digit decline in the S&P 500 – cool nominal growth. Higher discount rates will threaten US equity valuations before earnings weaken. AI stocks will peak well ahead of AI capex. Remain downbeat on EM stocks.
Our US Equity strategists expect the Anthropic and OpenAI listings to open a critical part of the AI story to public scrutiny, while adding to an issuance wave that has already weighed on S&P 500 multiples. IPO issuance is at a real-dollar record, though…
The US consumer is not benefitting from AI-related activity. Over the past 25 years, labor’s share of US national income has been in a structural decline. We have monitored cyclical developments in labor’s income share on BCA’s artificial intelligence…
Investors should favor long-maturity government bonds if concrete signs of AI-related productivity gains emerge. Long-maturity government bond yields have risen substantially this year. The rise in energy prices since March has been the main driver, but…
Our Private Markets & Alternatives strategists see the data center debt scare as overblown. Nerves around AI financing are rising, but our colleagues attribute most of the fear to GPU lending rather than to data centers themselves. Data centers are not GPUs:…