Key Takeaways
- US stocks sit just off all-time highs and are broadly flat year-to-date. Within the market, however, we have witnessed a notable rotation.
- Large cap tech names have sold off and value has outperformed growth. Small caps have generated much improved returns.
- What’s driven the moves? Investors are increasingly concerned around returns generated by AI-related capital expenditure (capex).
- Tech capex is set to be in the region of $660 billion over the next 12 months –much more than expected.
- Clarity around AI winners and losers will take time to emerge. In the meantime, investors are beginning to look more broadly for opportunities.
- We recently trimmed our US allocations towards neutral (from overweight) and are selectively tilting exposures towards small caps.
Anthony Willis
Senior Economist, Multi-Asset Solutions team
