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AI investment cycle may have peaked, Jefferies warns; raises India allocation to 14%

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AI investment cycle may have peaked, Jefferies warns; raises India allocation to 14%

Business News Tech AI AI investment cycle may have peaked, Jefferies warns; raises India allocation to 14%

AI investment cycle may have peaked, Jefferies warns; raises India allocation to 14%

According to a recent Jefferies report, global investment in artificial intelligence appears to be facing a mid-cycle correction. Although US tech giants have ramped up their capital spending, there are growing concerns regarding both financing and profitability. This situation may adversely impact US economic growth. Investors are advised to explore opportunities outside the AI realm, especially in healthcare and biotechnology sectors.

The global artificial intelligence (AI) investment cycle may have peaked or could be entering a mid-cycle correction, with rising financing costs and concerns over the returns on massive capital expenditure likely to weigh on technology investments in the coming year, according to a Jefferies report. Jefferies in its report said financial markets were increasingly signalling reluctance to fund AI-related investments, raising questions over the sustainability of spending by major US technology companies . "All of the above suggests the AI capex cycle may have peaked, or at least commenced a mid-cycle correction," the report said.

The report noted that the four major hyperscalers -- Microsoft, Amazon, Alphabet and Meta -- increased their combined capital expenditure by 108 per cent year-on-year to USD 202 billion in the third quarter of 2026. However, growing concerns over financing and profitability could mean that AI-related capital expenditure in 2027 falls short of current market expectations. 04 trillion next year. 1 per cent in the four quarters to the third quarter of 2026.


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