BlackRock Investment Institute sees AI as major driver of equity returns

Shares of AI-focused corporations will likely be a serious driver of returns for developed markets in a tricky financial atmosphere, BlackRock Investment Institute stated, citing a present rally that’s concentrated in a handful of know-how shares.

“S&P 500 gains have become increasingly concentrated in a handful of tech stocks, surpassing levels seen in the 2000s tech boom,” BlackRock Investment Institute’s group wrote in a mid-year outlook observe.

“We think this unusual equity market shows a mega force like AI can be a big driver of returns even when the macro environment is not your friend,” it stated.

The institute has an over-weight allocation for AI-related shares in developed markets.

It additionally upgraded long-term authorities bonds of the euro area and the UK to impartial, and stated it most popular short-dated U.S. Treasuries, mortgage-backed securities and high-grade credit score.

“We think the current pricing of future euro area inflation above future U.S. inflation is unlikely to pan out given more aggressive European Central Bank rate hikes,” the institute stated, whereas downgrading the inflation-linked bonds of euro space.

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