Analyst: High U.S. Treasury yields may delay AI boom

Jin10 reported on September 26 that Panmure Liberum strategist Joachim Klement stated that tech giants are pouring huge amounts of money into the AI sector, which is driving the continuous rise of the U.S. stock market. However, the rising long-term U.S. Treasury yields are threatening the investment boom in infrastructure such as data centers. The challenge facing the AI investment boom is that the massive funding required must be realized through financing, with a significant portion of the investment relying on debt financing. Since 2023, long-term Treasury yields have risen significantly (recently declined aside), and may continue to rise in 2026. This will increase the cost of debt, making some investment projects unprofitable. Data shows that for every 1 percentage point rise in long-term Treasury yields, the growth rate of IT equipment investment may decline by 0.6 percentage points, and the growth rate of software investment may decline by 0.4 percentage points. Higher Treasury yields, while not completely stifling growth, will inevitably cause delays. Given that current valuations already include overly high expectations, this may lead to the market lowering earnings forecasts for mega-cap companies and other growth stocks.