Asset management giant Lianbo fights back against AI slowdown concerns: tech giants' financing and capital expenditure plans remain the same

The Zhitong Finance App learned that fixed income experts from Lianbo Group, a world-renowned asset management agency, said that calls to slow down the pace of artificial intelligence (AI) development will not prevent large technology companies from continuing to advance financing and capital expenditure plans.

Thierry Taglione, senior fixed income investment strategist at Lianbo Group, said “These are all long-term financing plans,” and “although (slowing down the pace of AI development), we are talking about financing for a period of 10 years and longer,” said Thierry Taglione, a senior fixed income investment strategist at Lianbo Group. It won't be derailed by a weekend of news.”

Prior to Thierry Taglione's remarks, AI industry giants rarely called for “deceleration” in unison. Anthropic CEO Dario Amoudi called for a slowing down of cutting-edge AI model development in a cautionary post published on September 12. In the article, he said bluntly that the risks posed by AI are “serious” and that time must be taken to deal with these risks. The appeal was quickly answered by two key figures. Musk retweeted Amoudi's post on social media platform X and added: “Dario is right.” Oltman, the leader of OpenAI, wrote on X: “I agree with Dario. We need to control the pace of advancement of cutting-edge AI.”

AI-related stocks pulled back on Monday due to concerns that the pace of AI development might slow down. Prior to that, some investors were increasingly concerned about potential credit risk and whether AI infrastructure investments would eventually pay off.

Lianbo Group still anticipates that top AI hyperscale cloud vendors will continue to increase nominal capital expenditure in the near future, and predicts that next year's expenditure will exceed 1 trillion US dollars. However, the agency also warned that spending will slow down and eventually subside in the next few years, thereby dragging down overall US economic growth over the long term. “There are still many question marks about how long this AI-led growth will last.”

According to Lianbo Group statistics, the issuance of bonds related to the world's major hyperscale cloud vendors and data centers has reached more than US$330 billion since the beginning of the year. This unprecedented scale of issuance has become one of the factors putting pressure on the long-term yield curve of US Treasury bonds. Despite this, the company sees selective opportunities within the industry.

Thierry Taglione said, “Not all hyperscale cloud vendors are created equal. Managers need to favor companies with strong free cash flow and lower leverage, while underestimating those with more tight finances.” “Volatility is likely to continue, but the long-term financing plan itself is still in good condition,” he added.

Additionally, Eric Liu, Asia's co-head of fixed income at Lianbo Group, said that at the same time, Chinese technology companies have always been more self-disciplined in terms of spending and borrowing, focusing more on talent rather than large-scale data center construction. He stated:

“This differentiation is already reflected in relative bond valuations and is expected to continue unless there is a substantial change in access to advanced chips.” At the same time, he expects that the data center will eventually enter the Asian bond market for financing. “We are quite optimistic; the Asian market will not be so boring anymore.”

It is worth mentioning that Ed Yardeni, president of Yardeni Research, also tried to tone down concerns about AI slowing down on Monday. He said that the market is worried that technology companies may slow down AI development, but this is unlikely to disrupt broader infrastructure construction. “The reality is that there are already restrictions on data center construction, etc., and I don't think infrastructure construction will slow down.” He maintained the S&P 500 target of 8,400 points by the end of the year.

Ed Yardeni believes that last weekend's call to slow down AI was probably more about establishing security than reducing capital expenses. He said that as technology becomes more powerful, stronger guardrails may become necessary, but this will not necessarily weaken the investment cycle. He also pointed out that productivity data supports the AI-driven growth narrative and believes that the economy is still in a “productivity-driven technological boom.” As far as the market is concerned, Ed Yardeni's view is that AI concerns may cause short-term fluctuations, but are unlikely to stop the infrastructure investment needed to support the technology's continued expansion.