Temasek has warned that a sharp reversal in the artificial intelligence trade could become the biggest risk for global markets in 2027. Rohit Sipahimalani, Chief Investment Officer at Temasek, said he does not expect a major change right away. He mentioned, “We don’t see that as imminent, but will you have bumps in 2027? Yeah, possibly yes.”
AI has helped major US stocks to reach close to record levels, with strong results from big AI companies supporting investor confidence. Sipahimalani also listed inflation and interest rates as risks for markets.
The warning is interesting because Temasek is still planning to put more money into AI. The Singapore state investor wants to raise its AI exposure from around 6% of its portfolio to as much as 15% by 2031. About half of its current AI investments are in public markets. Temasek wants to increase that share to around 70% to 75%. Its AI investments cover chips, data centers, cloud services, AI models and applications.
A big part of the concern is how much money is going into AI. Technology companies are spending huge sums on chips, data centers and other systems. Strong earnings have helped support these companies so far. However, investors may become less patient if those earnings do not grow as expected.
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Temasek’s warning does not mean AI technology is about to collapse. The bigger problem could be the very high hopes around the industry.
Many AI companies are valued on the belief that their future growth will be huge. If that growth comes in lower than expected, investors may rethink those values. Share prices could fall even if the technology keeps improving.
Temasek is still betting on AI, but it is also warning investors not to ignore the risks. The real test may be whether AI earnings can keep up with the huge expectations and spending around the technology.