The rapid expansion of artificial intelligence and strong corporate earnings are expected to continue supporting stock market gains, though rising interest rates and liquidity pressures could create challenges in the months ahead, according to BlackRock’s Global Chief Investment Strategist Wei Li.
Speaking in an interview, Li said BlackRock remains positive on equities, particularly in the United States and emerging markets, despite record market highs and uncertainty linked to geopolitical tensions.
“We are currently risk-on because of strong earnings momentum, driven particularly in the US by the AI buildout,” Li said.
The surge in AI investment, including the construction of data centres and digital infrastructure, is reshaping global markets. Spending tied to AI infrastructure is projected to reach $6 trillion by the end of the decade, with estimates continuing to rise.
Li said the expansion of AI has strengthened connections between technology and sectors such as energy, utilities and infrastructure. Demand for electricity, power systems and industrial materials, including copper, has intensified as companies race to build AI capabilities.
BlackRock strategists have described this trend as “electro tech,” referring to industries such as batteries, electric motors and power electronics that support technology, infrastructure and defence systems.
Li said the firm currently favours equities over credit markets and long-duration government bonds.
“We like growth-oriented exposures, particularly US technology and emerging-market equities, more than credit and more than long-duration government bonds,” she said.
The Iran conflict and disruptions to energy supply chains have also accelerated concerns over energy security and supply resilience, themes Li believes will remain central to investment decisions.
“Energy security, resource nationalism and supply-chain resilience are becoming increasingly important for companies and governments,” she said.
While AI-related spending continues to drive optimism, Li warned that higher energy prices and supply constraints are contributing to inflationary pressure. Combined with expanding data-centre demand, those factors have pushed bond yields higher.
She noted that US Treasury bonds have not behaved as traditional safe havens during recent market stress.
“Yields have moved higher even when markets were nervous, which suggests Treasuries are not providing the same diversification benefits as before,” Li said.
BlackRock favours shorter-duration, high-quality bonds instead of longer-term government debt.
Li also pointed to a possible short-term challenge from several highly anticipated US technology listings expected later this year, including SpaceX, OpenAI and Anthropic. While the public offerings signal confidence in AI and financial markets, they could drain liquidity.
Estimates suggest the three offerings could absorb nearly $200 billion from financial markets, she said, particularly as large technology firms increasingly issue debt to finance AI expansion.
“That could influence market direction in the near term, and we are paying close attention to it,” Li said.
Despite those risks, Li maintained that long-term market performance will continue to depend on earnings and business fundamentals, arguing that AI investment has become powerful enough to shape the wider economy.
“One of our major themes is that micro is becoming macro,” she said. “AI spending is now large enough to drive the broader economic picture.”
