Furei: Not worried about the US AI bubble for now, has reduced holdings in US tech stocks and increased allocation to Chinese tech stocks.

Jefferies global macro strategist Mohit Kumar stated that he is not too worried about a bubble forming in the development of artificial intelligence (AI) in the United States. Even if a bubble were to form in the future, it is estimated that it would take at least two years to materialize. Currently, most of the AI capital expenditures from the major U.S. cloud service providers (Hyperscalers) come from cash, and the level of borrowing leverage for AI investments by companies is not high. It is expected that borrowing leverage will not rise to the levels seen during the dot-com bubble of 1999 to 2000 until the end of next year.

However, Kumar admitted that he has recently reduced his holdings in U.S. tech stocks due to market skepticism regarding the returns that capital expenditures can generate. At the same time, Kumar has shifted to overweighting Chinese tech stocks, believing that Chinese tech will be the big winner in the coming years, even decades, because China’s large models, like DeepSeek, can produce models of quality only slightly inferior to their American counterparts at a lower cost.

Kumar pointed out that AI will lead to reduced job growth and slowing inflation in various countries, which in turn will push global central bank policies towards a more dovish stance. He anticipates that the U.S. will cut interest rates twice in the second half of this year. Under the backdrop of fiscal expansion in various countries, global liquidity has significantly increased compared to the past two years, and this capital will eventually flow into different asset classes, benefiting asset performance.