1008 perspectives special edition AI

Perspectives Special Edition AI

Since we last reported on AI’s impact on the economy positive market trend for some time. Nevertheless, cur- and financial markets in late spring, much has rent valuations appear to incorporate highly optimis- changed. Model capabilities and corporate adoption tic earnings expectations. If revenues and returns on AI have continued to advance. In particular, the rapid investment disappoint, investors may have to reassess growth of AI agents, virtual collaborators that can per- these valuations. Diversifying some exposure towards form tasks autonomously and cooperate with other more defensive equities may therefore be appropriate. agents, has made AI considerably more useful and en- abled significant productivity gains in some activities. Investment in AI and its supporting infrastructure has also become so extensive that even the largest compa- These developments have generated substantial eco- nies cannot finance all planned expenditure from in- nomic benefits, particularly for the United States and ternal cash flow. The use of credit in its various forms emerging economies in North Asia. They have also is therefore growing rapidly. A greater role for debt is a driven a strong appreciation in the value of AI-related natural consequence of the industry’s expansion, but companies, producing significant wealth effects, as the pace and scale of borrowing, together with the high Damian Künzi and Josipa Markovic illustrate in their leverage embedded in some financing structures, are economic analysis (page 2). becoming a concern. As Valeriy Petrov explains in his analysis (page 6), investors should carefully examine However, the past few months have also shown that the structure, collateral, counterparties and refinanc- these benefits come at a steep cost and entail growing ing risks of these instruments before committing cap- risks. Security concerns, including reports of AI-ena- ital. bled cyberattacks, have added to growing investor cau- tion. While enthusiasm remains high, rising volatility AI is rapidly reshaping economies and markets, mak- and weaker returns among AI-related stocks suggest ing it a key theme for investors. We will continue to that markets are beginning to recognise these risks. follow developments closely and share our views. We Meanwhile, the current pace of investment is increas- hope you enjoy this edition. ing the risk of excess capacity, potentially reducing some of the expansion’s positive economic effects.

At the same time, the cost of developing and deploying advanced models has risen sharply, encouraging cus- tomers to seek cheaper and less proprietary alterna- tives. This could affect the valuations of leading AI companies, reshape the supply chain and alter its geo- José Antonio Blanco graphical balance, with China gaining ground in Senior Financial Market Advisor lower-cost models and processor development.

In his equity-market analysis (page 4), Andreas Hom- berger examines whether AI’s productivity gains are sufficient to justify its rapidly rising costs. Strong earn- ings at several leading companies could sustain the

© Swiss Life Asset Management AG – Perspectives – Special Edition AI Editorial deadline: 01/10/2026 – page 1 / 8

Focus #1: The economic effects of the AI build-out The construction of data centres is less relevant for the US economy than the huge investment announcements by the hyperscalers suggest. Emerging markets are the main beneficiaries of those hardware investments. The US economy is benefiting from the AI investment boom mainly through software investments and wealth effects.

Author: Damian Künzi, Head Macroeconomic Research and Josipa Markovic, Economist Emerging Markets

Software beats hardware spending leaks abroad as an estimated 80% of the com- The AI revolution is in full swing and is already having pute stack in data centres is imported. Therefore, the a direct impact on economic data through the enor- actual growth contribution from hardware investment mous investments in the necessary infrastructure. In is much smaller than the headline number suggests. this article, we would like to discuss these effects with Statements by some…