SINGAPORE — An unwinding of the artificial intelligence trade poses the biggest risk to markets, according to Singapore's state-owned investment giant Temasek.
"We don't see that as imminent, but will you have bumps in 2027? Yeah, possibly yes," Rohit Sipahimalani, Temasek's chief investment officer, said at the Milken Institute Asia Summit in Singapore.
AI has been one of the key forces keeping U.S. stocks near record highs even as Treasury yields have surged, Sipahimalani said, pointing to the earnings strength of major companies tied to the technology.
The S&P 500 has remained around record territory despite the rise in borrowing costs, supported by "AI and the earnings momentum around the key players," he said.
But the strength at the index level masks weakness beneath the surface. Sipahimalani noted that roughly half the stocks in the Russell 3000 were at least 20% below their June highs, highlighting the degree to which the market's resilience has depended on a small group of winners.