Stocks in artificial intelligence (AI) companies, according to the BlackRock Investment Institute, will be the primary driver of returns in developed markets during economic downturns. This statement is based on the disproportionately large share price growth of several tech companies.
According to the Institute, the level of profit concentration in the S&P 500 is far higher than the levels that were witnessed during the technological boom of the 2000s. In their semi-annual projection, the team at BlackRock Investment Institute notes that such a stock market demonstrates outstanding strength. Even in a macroeconomic climate that is adverse, artificial intelligence has the potential to become an important profit generator.
BlackRock Investment Institute, a subsidiary of the world’s largest asset manager, owns a sizeable portion of stocks relating to artificial intelligence (AI) in developed countries. Since the "new regime" of economic volatility and high interest rates is projected to last for some time, it suggests that investors take precautions and not put all their eggs in one basket.
Jean Boivin, the Head of BlackRock, recently told reporters that the company anticipates the current climate to persist. He said that the labor market's tightening conditions, the energy transition, and geopolitical volatility will all contribute to rising prices.
BlackRock forecasts that central banks of developed countries will keep interest rates high despite the possibility of financial upheaval.
The institute says in its projection for the second half of the year that it will continue to keep a sizeable part of short-term US government bonds since it believes that interest rates will remain high for a considerable amount of time.
They were also optimistic about the state of the US mortgage-backed securities market. In addition, BlackRock changed its assessment of Japanese equities from negative to neutral, stating that the country's negative interest rates are helping to strengthen the country's equity market.
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