Sink or Swim?

GMO

Martin Emery, Emmeline Fletcher

Research

6 Pages

AI-related equities have been a major driver of global market sentiment, and the capex ramp by Hyperscalers is increasingly central to the narrative. GMO evaluates how past episodes of unusually high aggregate corporate investment have mapped to returns and how that may impact portfolio risk exposure.

Key Takeaways

Future Returns: Evidence shows that investment booms have been linked to lower subsequent market returns.
Global Context: The investment/return relationship appears across most developed markets in the analysis.
Sentiment: For all the Hyperscalers (except Oracle), the most recent calls have been significantly more positive than their average over the previous 4 quarters.
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