Entering 2026, we anticipate that the continued acceleration of AI investment will be a core factor influencing stock valuations, potentially leading to higher market volatility and wider credit spreads.
While we expect AI investment to maintain strong growth, our forecasts indicate that the proportion of incremental AI investment to GDP (i.e., the AI investment surge) may peak in early 2027. From a macroeconomic perspective, this change is generally manageable, but it could pose a greater challenge to financial markets for three main reasons.
First, AI investment contributes far more to corporate earnings and stock market capitalization growth than it directly contributes to GDP growth. Second, AI-related stocks have already received a significant valuation premium due to anticipated productivity gains, especially companies directly benefiting from the AI infrastructure investment boom. This means that these stocks are more vulnerable to shocks should signs emerge indicating that the AI industry's development prospects fall short of expectations. Third, the peak in growth momentum itself could be a significant market turning point, even if actual growth remains healthy.
Once the incremental growth of AI investment surpasses its peak, the market may begin to reassess the upside potential for future growth. As investment growth slows, the number of consistently positive surprises exceeding market expectations may also gradually decrease. We may have already begun to see this shift in the AI capital expenditure cycle.
