AllianceBernstein sees rising market risks strengthening case for defensive equities
AB•AllianceBernstein said AI financing risks, rising interest rates and persistent inflation strengthen the case for defensive equities. It said AI capital spending growth could slow sharply after peaking in 2026, while major spenders’ aggregate free cash flow turns negative.
1. Risks to AI spending
AllianceBernstein said AI capital spending growth could slow sharply after peaking in 2026, while major spenders’ aggregate free cash flow turns negative. Revenue needed to justify AI spending plans exceeds plausible near-term projections, it said, increasing reliance on external financing as borrowing costs rise.
2. Case for defensive stocks
AllianceBernstein said stocks combining quality, stability and attractive valuations have historically performed well during periods of high, rising Treasury yields and higher inflation.
