US-China AI arms race may prolong spending boom, Focus Asset Management says
QQQ•Focus Asset Management says US-China AI competition could prolong AI capital spending beyond economically justified levels and delay a likely reckoning.
1. AI spending outlook
Focus Asset Management says national security priorities could drive government support for AI leaders and weaken market discipline, even if investment returns disappoint. It says China has effectively closed the AI model performance gap with the US, while large technology companies largely fund AI spending internally, leaving shareholders exposed to substantial losses without necessarily triggering a banking crisis. The analysis advises avoiding the riskiest AI stocks at extreme valuations while recognizing the technology’s transformative potential.
