Bank of America's European equity strategy head Sebastian Raedler warned that the tech rally has overextended, raising questions about who will fund the massive capital expenditure driving semiconductor demand.
Raedler flagged concerns about valuations following Micron's strong sales forecast, questioning the sustainability of the capex cycle that has bolstered chipmaker demand.
"Who is going to pay for this capital expenditure that is basically fueling the Micron demand," Raedler said on Bloomberg Television.
The comments reflect growing skepticism among investors about whether tech stocks—particularly semiconductor companies—have climbed too far on expectations of AI-driven spending. The rally has been fueled by optimistic projections for data center buildouts and AI infrastructure investment.
BofA's concern centers on the real-world ability and willingness of companies to sustain the trillion-dollar capex commitments needed to support the projected AI boom. Market participants increasingly question whether spending will match the elevated valuations already priced into tech stocks.
The debate underscores broader tension in markets between AI enthusiasm and financial reality as investors reassess whether near-term capex cycles can justify current equity prices.
Alibaba Group is divesting its gaming division in a deal valued at $1.5 billion or more. The sale marks a strategic shift as the Chinese e-commerce giant accelerates its artificial intelligence investments.
Apple has revised its iPhone upgrade program, lowering monthly lease costs for users who prefer renting over purchasing. The program allows customers to upgrade to new models annually.
Malaysia posted 6% GDP growth in Q2, powered by a 7.5% surge in manufacturing driven by chipmaking and 6.6% construction growth tied to data center expansion.
BlackBerry achieved a positive cash position in Q1, marking its first cash-positive first quarter since 2017. The turnaround was driven by its QNX and Secusmart software divisions.