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Key points:
Nvidia $NVDA and the broader AI ecosystem drive equity sentiment Elevated bond yields yet limited immediate headwind for hyperscalers’ growth Corporate credit from hyperscalers seen as attractive versus US Treasuries Physical constraints and underinvestment support potential commodity supercycle
Nick Schoenmaker from Portfolio Construction Forum sees global markets caught between AI enthusiasm and deteriorating macro conditions. He points to Nvidia (NASDAQ:NVDA) as central to current equity sentiment, suggesting it is now more influential than economic data for many investors. Schoenmaker notes that the AI theme is broadening across the ecosystem, highlighting AMD $AMD, Intel $INTC, Samsung and TSMC $TSM, even as bond yields surge and yield curves steepen in the US, UK and Germany.
Schoenmaker argues that, for now, higher yields are not significantly constraining hyperscalers’ expansion, with strong AI earnings and capital expenditure offsetting valuation pressures. He contends that corporate credit issued by these hyperscalers can appear more attractive than US Treasuries, given rising term premia, inflation risk premia and patchy Treasury market liquidity. However, he warns that a prolonged 5% long bond regime could eventually compress valuations, particularly in AI leaders.
Looking ahead, Schoenmaker stresses physical constraints to AI growth, such as power, water and underinvestment in infrastructure and commodities, as potential drivers of an early-stage commodity supercycle. He frames Australia as relatively well positioned thanks to its commodity base and geopolitics, but without the same AI-driven exuberance or severe K-shaped polarisation seen in the US.
Disclaimer
The views and opinions expressed in this article are those of Nick Schoenmaker and do not necessarily represent the views, policies or positions of Portfolio Construction Forum or its affiliates.
