JPMorgan Asset Management warns of AI-factor risk in fixed income

JPMorgan Asset Management warns of AI-factor risk in fixed income

JPMorgan Asset Management says investors increasingly face AI exposure across both equities and fixed income as the infrastructure buildout accelerates.

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By Editorial Team
Edited by Estefano Gomez

JPMorgan Asset Management warned that concentration risk tied to artificial intelligence has spread beyond equities into fixed income, increasing the need for investors to diversify even as the broader AI investment cycle remains intact.

Gabriela Santos, chief market strategist for the Americas at JPMorgan Asset Management, said investors can remain bullish on AI while still paying close attention to portfolio construction, position sizing and leverage.

Her comments follow a sharp July correction in technology stocks. The Philadelphia Semiconductor Index fell 21% during the month, while South Korea’s Kospi dropped 22%, highlighting the risks associated with crowded exposure to chipmakers and other AI linked companies.

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Santos said the challenge is that AI exposure now cuts across sectors, regions and asset classes. She pointed to Treasuries, gold and core real estate as areas that can provide more differentiated return streams.

She estimated the broader AI buildout could involve about $5.5 trillion in capital expenditures across public and private markets, while noting that the investment cycle is already showing up in corporate profits. 

Goldman Sachs strategists separately estimated AI data center spending could exceed $900 billion in 2026 and reach as much as $1.4 trillion in 2027.

The concentration risk is also becoming more visible in bond portfolios as large technology companies increasingly tap debt markets to finance infrastructure spending. 

Santos noted that investment grade issuance has reached a fourth consecutive record month, while companies including Alphabet have issued unusually long dated debt.

She said multi asset investors may now be exposed to the same AI theme through both their equity and fixed income holdings, making diversification more difficult.

Santos added that debt issued by hyperscalers should be evaluated individually, particularly as financing structures involving special purpose vehicles and data center leases become more complex.

Disclosure: This article was edited by Editorial Team. For more information on how we create and review content, see our Editorial Policy.
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JPMorgan Asset Management warns of AI-factor risk in fixed income
JPMorgan Asset Management warns of AI-factor risk in fixed income

JPMorgan Asset Management says investors increasingly face AI exposure across both equities and fixed income as the infrastructure buildout accelerates.

By Editorial Team
Edited by Estefano Gomez

Share

Add us on Google

JPMorgan Asset Management warned that concentration risk tied to artificial intelligence has spread beyond equities into fixed income, increasing the need for investors to diversify even as the broader AI investment cycle remains intact.

Gabriela Santos, chief market strategist for the Americas at JPMorgan Asset Management, said investors can remain bullish on AI while still paying close attention to portfolio construction, position sizing and leverage.

Her comments follow a sharp July correction in technology stocks. The Philadelphia Semiconductor Index fell 21% during the month, while South Korea’s Kospi dropped 22%, highlighting the risks associated with crowded exposure to chipmakers and other AI linked companies.

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Santos said the challenge is that AI exposure now cuts across sectors, regions and asset classes. She pointed to Treasuries, gold and core real estate as areas that can provide more differentiated return streams.

She estimated the broader AI buildout could involve about $5.5 trillion in capital expenditures across public and private markets, while noting that the investment cycle is already showing up in corporate profits. 

Goldman Sachs strategists separately estimated AI data center spending could exceed $900 billion in 2026 and reach as much as $1.4 trillion in 2027.

The concentration risk is also becoming more visible in bond portfolios as large technology companies increasingly tap debt markets to finance infrastructure spending. 

Santos noted that investment grade issuance has reached a fourth consecutive record month, while companies including Alphabet have issued unusually long dated debt.

She said multi asset investors may now be exposed to the same AI theme through both their equity and fixed income holdings, making diversification more difficult.

Santos added that debt issued by hyperscalers should be evaluated individually, particularly as financing structures involving special purpose vehicles and data center leases become more complex.

Disclosure: This article was edited by Editorial Team. For more information on how we create and review content, see our Editorial Policy.