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Fears about artificial intelligence are currently gripping fixed income investors, according to the latest credit investor survey conducted by Bank of America Global Research.
A February poll found investors expected a surge in corporate bond issuance from hyperscalers, with an AI bubble seen as the biggest risk for the first time. About 23% of those surveyed said that was their biggest concern, compared to 9% in the company’s December survey.
Companies including AmazonGoogle’s parent alphabet and meta announced significant spending plans as it scales out its AI capabilities. Bank of America credit strategist Barnaby Martin said in a note Tuesday that high-end credit investors now expect hyperscalers to issue $285 billion this year, up from the $210 billion expected in a December survey.
“Investors, however, are more optimistic about the ultimate technology disruption to come. Only 10% say AI making companies obsolete is their biggest concern,” he wrote.
Such obsolescence concerns have hit the stock market in recent weeks as concerns about AI disruption spread across sectors.
Software companies, for example, fell after AI company Anthropic announced new AI tools. Stocks have changed direction since Tuesday’s most recent decline, but iShares Enhanced Technology Software Sector ETF It has fallen more than 25% since the beginning of the year.
Martin noted that despite rising tensions between the US and Iran, geopolitics has not been a big factor in the interest of bond investors lately, with only 10% saying it is their biggest fear. Despite a new Fed chair expected to take office in May, no investors pointed to the central bank’s policy mistakes as a major risk.
