AI Build-Out Supply Risks Draw Warning From Schwab Strategist
Liz Ann Sonders says equipment access and rising costs may threaten AI companies’ profit expectations more than high valuations.
Key takeaways
- Liz Ann Sonders identified equipment access and supply-chain risks as concerns for AI expansion.
- Nvidia, Apple and Microsoft together represented more than 21% of the S&P 500, according to cited data.
Charles Schwab chief investment strategist Liz Ann Sonders said supply-chain risks and access to equipment may pose a greater threat to AI expansion than high valuations. If technology companies cannot secure AI and memory chips, she said, they may not meet robust profit predictions.
Sonders said the supply risks receive less attention than concerns about demand. She also noted that AI may be disinflationary over the long term but is inflationary “in the here and now.”
The S&P 500 has become highly concentrated in three stocks, according to Creative Planning data cited in the article. Nvidia, Apple and Microsoft together represented more than 21% of the index.
For comparison, IBM, AT&T and ExxonMobil made up 13.4% of the S&P 500 at their peak in the mid-1980s, the article reported.
In BofA’s latest fund manager survey, being long global semiconductor stocks was October’s most crowded trade. An AI bubble bursting ranked as the second-highest risk, behind rising Treasury yields. Sonders also said the cost of the AI build-out had risen significantly.
This article was produced with the help of AI technology. Source: Yahoo Finance
