Bond market may be pricing AI productivity gains as yields rise: JPMorgan Private Bank

The optimism also extends to semiconductors, a major beneficiary of the AI investment cycle, where the firm remains bullish despite a more than 20% correction. But while the discount between two-year forward and trailing 12-month price-to-sales multiples for semiconductors has widened to 40%-50%, from a typical 20%, suggesting investors are already pricing in weaker earnings, Manoukian said this creates an opportunity for investors.

"We believe that a peak in earnings is already priced in, and we don't think that earnings have yet peaked. The opportunity for investors is that if some of these companies realize the sales that analysts have already forecasted, they could appreciate materially if the market is still willing to pay the same trailing-twelve-month earnings in 2028."

The AI investment boom is also fueling a borrowing spree among hyperscalers, adding to competition for funds at the long end of the bond market as they ramp up spending on data centers and other infrastructure.