AMG National Trust Bank warns debt-fueled AI spending raises market reversal risk
QQQ•AMG National Trust Bank warned that debt-funded AI infrastructure spending raises the risk of a steep reversal in credit and equity markets. The bullish outlook assumes hyperscaler cash flow grows 15% to 20% annually through 2030, with financing available and costs contained.
1. AI spending risks
AMG National Trust Bank warned that debt-funded AI infrastructure spending raises the risk of a steep reversal in credit and equity markets. It said the bullish equity outlook assumes hyperscaler cash flow grows 15% to 20% annually through 2030, with financing available and costs contained; demand lagging computing capacity could trigger a reversal.
2. Portfolio approach
The bank said major indexes have become dependent on continued AI capital spending. It recommended retaining infrastructure exposure through broad indexes while diversifying into high-quality, dividend-paying companies less dependent on AI spending, and selectively investing in applications and platforms that could benefit from measurable productivity gains.
