Company Interview / The $750 billion AI trade no one wants to miss

Key points:

AI and hyperscaler CapEx, led by Nvidia ($NVDA), seen as a major equity tailwind Elevated bond yields and inflation risks drive an underweight stance on duration Strait of Hormuz reopening viewed as crucial for easing oil and inflation pressures

Kerry Craig from JPMorgan states that improving prospects for the reopening of the Strait of Hormuz are easing some inflation and bond yield pressures, supporting a constructive stance on global equities. Craig points to Nvidia’s latest update as reinforcing momentum in artificial intelligence investment, arguing that AI-driven capital expenditure is a powerful tailwind for markets. He highlights a developing “micro versus macro” tension, with company-level AI gains offsetting geopolitical and inflation risks.

Craig notes that hyperscalers plan around US$750 billion of spending this year, which in his view underpins demand not only for semiconductor leaders such as Nvidia (NASDAQ:NVDA) but also for cooling technology, electrical equipment, miners, and utilities. He contends that the AI theme is secular, extending across US and North Asian markets, with valuations in many areas not appearing excessively stretched given revenue growth.

On fixed income, Craig maintains an underweight in bond duration, citing elevated yields, lingering inflation risks and fiscal concerns. He acknowledges that higher yields can pressure growth stocks’ valuations but points to strong demand for hyperscaler investment-grade credit. On Australia, Craig expects tighter Reserve Bank policy and earlier rate hikes to cool growth, weigh on housing and cyclicals, yet sees unemployment remaining historically low.