BlackRock: Continues to maintain an overweight position on technology and artificial intelligence themes

According to the Smart Finance app, BlackRock stated in a post that in the short term, a few winners in artificial intelligence will bring investment returns in terms of tactical allocation. Therefore, they continue to maintain an overweight view on the technology and artificial intelligence themes. Due to risk preferences, BlackRock prefers equity assets over fixed income assets, but also favors the returns from short-term bonds.

BlackRock believes that central banks in developed markets are forced to keep interest rates at high pre-pandemic levels to curb inflation. In the new macro environment, both inflation and interest rates are high, and limited supply leads to low growth, which may continue in this unprecedented macro environment. In addition, economies are also adapting to current constraints on production due to aging populations, global supply chain restructuring, and low-carbon transitions, leading to increased capital investment.

Artificial intelligence, as a technology that can enhance productivity in the long term to alleviate inflationary pressures, was a focus of attention at BlackRock's seminar. While these benefits from artificial intelligence are still possible, they will take more time. Some fund managers at BlackRock believe that the increase in initial capital expenditure for artificial intelligence may lead to inflation. Since the popularity of ChatGPT last year, capital expenditures from artificial intelligence data centers have increased significantly, and this trend is expected to continue in the coming years. The surge in capital spending and demand for resources may lead to bottlenecks, which means that before artificial intelligence brings long-term relief to inflation, it may first exacerbate short-term inflation. The market and central banks in developed markets have not yet taken this complex situation into consideration.

Where will the market go in the second half of the year? BlackRock believes that in the next 6 to 12 months, winners in the field of artificial intelligence will continue to drive investment returns, so they maintain an overweight view on opportunities related to the technology and artificial intelligence themes. The uptrend in artificial intelligence is supported by corporate earnings and still has room for growth in the future. Currently, there is no bubble in the artificial intelligence sector, and large technology companies have strong profitability, which is completely different from the situation of those companies that triggered the internet bubble in the past.

The strong balance sheets and profit momentum of large technology companies also support BlackRock's risk preference. Even in a high-interest rate environment, the maturing debt of investment-grade companies in the coming years remains manageable, and profitability continues to improve. Due to risk preferences, BlackRock leans towards equity assets over fixed income assets. However, because interest rates are expected to remain high for a longer period, they also prefer short-term bonds for returns