As the AI rally that's helped drive US stocks to new highs shows signs of cooling, BlackRock and Vanguard, the world’s two largest asset managers, have come out with differing perspectives on what's next.
On Wednesday, analysts at BlackRock, the Larry Fink-led fund titan overseeing $11.5 trillion in assets, expressed optimism about AI’s long-term potential.
In a new 2025 Global Outlook report, researchers at the BlackRock Investment Institute argued that AI is still in its initial “buildout phase," which it says is fueling significant investment in infrastructure like data centers, chips, and power systems. They estimated spending on this infrastructure could reach $700 billion by 2030, equivalent to 2 percent of US GDP.
“We stay risk-on ... and go further overweight US stocks as the AI theme broadens out,” BlackRock said in its Wednesday report, emphasizing that AI adoption could generate new revenue streams and support economic growth across multiple sectors.
While the analysts acknowledged concerns about potential overinvestment, they maintained confidence in the broader economic benefits from the new wave of technology.
“Mega cap tech does not look overextended for now. And market concentration does not, in our view, imply market fragility if it is driven by transformation,” they said.
Meanwhile, one of Vanguard's leading strategists sounded alarms about the AI boom’s impact on stock valuations, likening it to the late 1990s surge in technology stocks that ended with the dot-com bubble.
Speaking to the Financial Times, Vanguard’s chief economist Joe Davis cautioned that the market may be overly optimistic about AI’s near-term potential. While the firm holds "roughly 60 to 65 percent odds that AI is more impactful than the personal computer," he says equity investors in the US are "pricing roughly a 90 percent probability."
While the biggest beneficiaries of this year's tech rally have been those at the epicenter of the AI revolution, including Nvidia and other Big Tech firms, he argued that those companies applying AI may ultimately show the most seismic long-term gains.
“It’s companies outside of technology that are actually using the technology – hospitals, utilities, financial companies,” he explained, adding that competition from new AI entrants could eat into the sector's returns over time.
“The irony is that even if the technology actually is transformational, you can still have a correction in the very prices of the stocks that led to the transformation itself,” he said.
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