M&A Poised to Gain Momentum

Our CIO and Chief U.S. Equity Strategist Mike Wilson looks at buying opportunities approaching year-end, as U.S. trade policy and the Fed find middle ground. Read more insights from Morgan Stanley.----- Transcript ----- Mike Wilson: Welcome to Thoughts on the Market. I'm Mike Wilson, Morgan Stanley’s CIO and Chief U.S. Equity Strategist. Today on the podcast I’ll be discussing recent macro events and third quarter earnings results.It's Monday, November 3rd at 11:30am in New York. So, let’s get after it.Last week marked the passage of two key macro events: the meeting on trade between Presidents Trump and Xi and the October Fed meeting. On the trade front, the U.S. agreed to cut tariffs on China by 10 percent and delay newly proposed tech export controls for a year. In exchange, China agreed to pause its proposed export controls on rare earths, and resume soybean purchases while cracking down on fentanyl. This is a major positive relative to how developments could have gone following the sharp escalation a few weeks ago, and markets have responded accordingly.With respect to the Fed meeting, Powell suggested policy is not on a preset course which took the bond market probability of a December rate cut down from 92 percent before the meeting to 68 percent currently. It also led to some modest consolidation in equity prices while breadth remained very weak. In my view, the market is saying that if growth holds up but the Fed only cuts rates modestly, leadership is likely to remain narrow and up the quality curve.Over the next 6 to 12 months, we think moderate weakness in lagging labor data, and a stronger than expected earnings backdrop ultimately sets the stage for a broadening in market leadership. However, we are also respectful of the signals the markets are sending in the near term. This means it's still too early to press the small cap/low quality/deep cyclical rotation trade until the Fed shows a clear willingness to get ahead of the curve. Perhaps just as important for markets was the Fed's decision to end Quantitative Tightening, or QT, in December.Recently, Jay Powell has acknowledged the potential for rising stress in the funding markets and indicated the Fed could end QT sooner rather than later. Over the past month, expectations for the timing of this QT termination ranged from immediately to as late as February. Powell seemed to split the difference at last week's meeting and this could be viewed as disappointing to some market participants.In order to monitor this development, I will be watching how short-term funding markets behave. Specifically, overnight repo usage has been on the rise and if that continues along with the widening spreads between the Secured Overnight Financing Rate and fed funds, I believe equity markets are likely to trade poorly, especially in some of the more speculative areas. In short, we think higher quality areas of the market are likely to continue to outperform until this dynamic is settled.Meanwhile, earnings season is in full swing and the real standout has been the upside in revenue surprises, which is currently more than double the historical run-rate. We think this could provide further support that our rolling recovery thesis is under way which leads to much better earnings growth than most are expecting.Bottom line, we are gaining more confidence in our core view that a new bull market began in April with the end of the rolling recession and the beginning of a new cycle. This means higher and broader earnings growth in 2026 and a potentially different leadership in the equity market. The full broadening out to lower quality, smaller capitalization stocks is being held back by a Fed that continues to fight inflation; perhaps not realizing how much the private economy and average consumer needs lower rates for this rolling recovery to fully blossom. Last week’s Fed meeting could be disappointing in that regard in the short run for equity markets. As a result, stay up the quality curve until we get more clarity on the timing of a more dovish path by the Fed and look for stress in funding markets as a possible buying opportunity into year end.Thanks for tuning in; I hope you found it informative and useful. Let us know what you think by leaving us a review. And if you find Thoughts on the Market worthwhile, tell a friend or colleague to try it out!

3 Nov 4min

Our Japan Financials Analyst Mia Nagasaka discusses how the country’s new stablecoin regulations and digital payments are set to transform the flow of money not only locally, but globally.Read more insights from Morgan Stanley.----- Transcript -----Welcome to Thoughts on the Market. I’m Mia Nagasaka, Head of Japan Financials Research at Morgan Stanley MUFG Securities. Today – Japan’s stablecoin revolution and why it matters to global investors. It’s Friday, October 31st, at 4pm in Tokyo. Japan may be late to the crypto market. But its first yen-denominated stablecoin is just around the corner. And it has the potential to quietly reshape how digital money moves across the country and globally. You may have heard of digital money like Bitcoin. It’s significantly more volatile than traditional financial assets like stocks and bonds. Stablecoins are different. They are digital currencies designed to maintain a stable value by being pegged to assets such as the yen or U.S. dollar. And in June 2023, Japan amended its Payment Services Acts to create a legal framework for stablecoins. Market participants in Japan and abroad are watching closely whether the JPY stablecoin can establish itself as a major global digital currency, such as Tether. Stablecoins promise to make payments faster, cheaper, and available 24/7. Japan’s cashless payment ratio jumped from about 30 percent in 2020 to 43 percent in 2024, and there’s still room to grow compared to other countries. The government’s push for fintech and digital payments is accelerating, and stablecoins could be the missing link to a truly digital economy. Unlike Bitcoin or other cryptocurrencies, stablecoins are designed to suppress price volatility. They’re managed by private companies and backed by assets—think cash, government bonds, or even commodities like gold. Industry watchers think stablecoins can make digital payments as reliable as cash, but with the speed and flexibility of the internet. Japan’s regulatory approach is strict: stablecoins must be 100 percent backed by high-quality, liquid assets, and algorithmic stablecoins are prohibited. Issuers must meet transparency and reserve requirements, and monthly audits are standard. This is similar to new rules in the U.S., EU, and Hong Kong. What does this mean in practice? Financial institutions are exploring stablecoins for instant payments, asset management, and lending. For example, real-time settlement of stock and bond trades normally take days. These transactions could happen in seconds with stablecoins. They also enable new business models like Banking-as-a-Service and Web3 integration, although regulatory costs and low interest rates remain hurdles for profitability.Or think about SWIFT transactions, the backbone of international payments. Stablecoins will not replace SWIFT, but they can supplement it. Payments that used to take days can now be completed in seconds, with up to 80 percent lower fees. But trust in issuers and compliance with anti-money laundering rules are critical. There’s another topic on top of investors’ minds. CBDCs – Central Bank Digital Currencies. Both stablecoins and CBDCs are digital. But digital currencies are issued by central banks and considered legal tender, whereas stablecoins are private-sector innovations. Japan is the world’s fourth-largest economy and considered a leader in technology. But it takes a cautious approach to financial transformation. It is preparing for a CBDC but hasn’t committed to launching one yet. If and when that happens, stablecoins and CBDCs can coexist, with the digital currency serving as public infrastructure and stablecoins driving innovation. So, what’s the bottom line? Japan’s stablecoin journey is just beginning, but its impact could ripple across payments, asset management, and even global finance. Thanks for listening. If you enjoy the show, please leave us a review wherever you listen and share Thoughts on the Market with a friend or colleague today.

31 Okt 4min

Our analysts Ariana Salvatore and Erin Wright explain the pivotal role of healthcare in negotiations to end the government shutdown.Read more insights from Morgan Stanley.----- Transcript -----Ariana Salvatore: Welcome to Thoughts on the Market. I'm Ariana Salvatore, Morgan Stanley's U.S. Public Policy Strategist. Erin Wright: And I'm Erin Wright, U.S. Healthcare Services Analyst. Ariana Salvatore: Today we'll talk about what the U.S. government shutdown means for healthcare. It's Thursday, October 30th at 12pm in New York. Thus far, it seems like markets haven't really been paying too much attention to the government shutdown. Obviously, we're aware of the cumulative economic impact that builds every week that it lasts. But we haven't seen any movement from the political front either this week or last, which signals that it could be going on for a while longer. That being said, the end of this month is an important catalyst for a few reasons. First of all, you have the potential rollover of SNAP benefits. You have another potential missed military paycheck. And most importantly, the open enrollment period for healthcare plans. Polling is still showing neither side coming out on top with a clear advantage. Absent that changing, you probably need to see one of two things happen to have any movement forward on this front. Either more direct involvement from President Trump as he wraps up the APEC meeting or some sort of exogenous economic event, like a strike from air traffic controllers. Those types of events obviously are difficult to predict this far in advance. But up until now we know that President Trump has not really been involved in the debate. And the FAA seems to be operating a little bit with delays, but as usual. So, Erin, let's pivot to what's topical in here from a healthcare policy perspective. What are investors that you speak with paying the most attention to? Erin Wright: You bring up some important points Ariana. But from a policy perspective, it's very much an always top of mind for healthcare investors here. Right now, it is a key negotiating factor when it comes to the government shutdown. So, the shutdown debate is predominantly centered around the Affordable Care Act or the healthcare exchanges. This was a part of Obamacare. It was a program where individuals can purchase standalone health insurance through an exchange marketplace.The program has been wildly popular. It's been wildly popular in recent years with 24 million members. Growing 30 per cent last year, particularly with enhanced subsidies that are being offered today. So those subsidies are expected to expire at the end of this year, and those exchange members could be left with some real sticker shock – especially when we're going to see premium increases that could, on average, increase about 25 to 30 percent, in some states even more. So, folks are really starting to see that now. November 1st will be a key date here as open enrollment period begins. Ariana Salvatore: Right. So, as you mentioned, this is pretty key to the entire shutdown debate. Republicans are in favor of letting the expanded subsidies roll off. Democrats want to restore them to that COVID level enhancement. Of course, there's probably some middle path here, and we have seen some background reporting indicating that lawmakers are talking about a potential middle path or concession. So, talk me through what's on the table in terms of negotiating a potential compromise or extension of these subsidies. Erin Wright: So, we could see a permutation of outcomes here. Maybe we don't get a full extension, but we could see something partial come through. We could see something in terms of income caps, which restrict, kind of, the level of participants in the AC exchanges. You could see out-of-pocket minimums, which would eliminate some of those shadow members that we've been seeing and have been problematic across the space. And then you could also grandfather in some existing members that get subsidies today. So, all of those could offer some degrees of positive. And some degrees of relief when it comes to broader healthcare services, when it comes to insurance companies, when it comes to others that are participating in this program, as well as the individuals themselves. So, it's really a patient dynamic that's getting real here. A lot is on the table, but a lot is at stake with the potential for the sunsetting of these subsidies to drive 4 million in uninsured lives. So, it is meaningful, and I think that that's something we have to kind of put into perspective here.So, would love to know Ariana though, beyond healthcare, what are some of those key debates in terms of the negotiations around the shutdown? Ariana Salvatore: Healthcare really is central to this debate. So aside from just the ACA subsidies that we talked about, some Democrats have also been pushing for a repeal or rollback of some of the pieces of the One Big Beautiful Bill Act that passed earlier this year. That was the fiscal bill of Republicans passed through the reconciliation process – that included some cuts to Medicaid down the line. So, there's been talk around that front. I think more of a clear path on the subsidies front, because that seems to be something that Republicans are treating as an absolute no-go. Some of the other really key debates are around just kind of how to keep the ball rolling while we're still in the shutdown. So, I mentioned SNAP at first, the potential release of some contingency funds there. Again, the military paychecks are really critical. And, of course, what this all means for incoming data, which is really important – not just for investors but also for the Fed, as it kind of calibrate[s] their next move. In particular, as we head into the December meeting. I think we got a little bit of a hawkish surprise in yesterday's meeting, and that's something that investors were not expecting. So, obviously the longer that this goes on, the more those risks just continue to grow, and this deadline that we're talking about is a really critical one. It's coming up soon. So we should have a sense of how our prognosis pans out in the coming days. Thanks for the conversation, Erin. Erin Wright: Great talking to you, Ariana. Ariana Salvatore: And to our audience, thanks for listening. Let us know what you think by leaving us a review wherever you listen. And if you like Thoughts on the Market, tell a friend or colleague about the podcast today.

30 Okt 5min

Our U.S. Biotech and Biopharma analysts Sean Laaman and Terence Flynn discuss the latest developments that could be positioning the healthcare sector for strong outperformance.Read more insights from Morgan Stanley.----- Transcript -----Sean Laaman: Welcome to Thoughts on the Market. I'm Sean Laaman, Morgan Stanley's U.S. Small and Mid-Cap Biotech Analyst. Terence Flynn: And I'm Terence Flynn, Morgan Stanley's U.S. Biopharma Analyst. Sean Laaman: Today, we'll discuss how a rally in the healthcare sector is being driven by more favorable macro conditions. It's Tuesday, October 28th at 10am in New York. So, Terence, healthcare has lagged the broader market year-to-date, and valuations have been near historical lows. But recent weeks show strengthening performance. Policy headwinds have been front and center.What's changed in the regulatory environment and how is the biopharma sector adapting to these pricing and tariff dynamics? Terence Flynn: Sean, as you know, with many other sectors, tariffs were initially a focus earlier this year. But a number of companies in our space have subsequently announced significant U.S. manufacturing investments to reshore supply chains. And hence, the market's less focused on tariffs in our space right now. But the other policy dynamic and focus is what's called Most Favored Nation or MFN drug pricing. Now, this is where the President's been focused on aligning U.S. drug prices with those in other developed countries. And recently we've seen several companies announce agreements with the administration along these lines, which importantly has provided investors with more visibility here. And we're watching to see if additional agreements get announced. Sean Laaman: Got it. Another hurdle for Large-cap biopharma is a looming expiration of patents with [$]177 billion exposed by 2030. How is this shaping M&A trends and strategic priorities? Terence Flynn: For sure. I mean, as you know, Sean, patent expiry is our normal part of the life cycle of drug development. Every company goes through this at some point, but this does put the focus on company's internal pipelines to continue to progress while also being able to access external innovation via M&A. Recently we have started to see a pickup in deal activity, which could bode well for performance in SMID-cap biotech. Sean Laaman: At the same time, you believe relative valuations look compelling for Large-cap biopharma. Where are valuations versus where they've been historically? What's driving this and how should investors think about positioning? Terence Flynn: Absolutely. Look, on a price to earnings multiple, the sector's trading at about a 30 percent discount to the S&P 500 right now. Now that's in line with prior periods of policy uncertainty. But as policy visibility improves, we expect the focus will shift back to fundamentals. Now, positioning to me still feels light here, given some of the patent cliff dynamics we just discussed. Now, Sean, with the Fed moving toward rate cuts, how do you see this impacting your sector on the biotech side? Sean Laaman: Well, Terence, particularly in my space, which is Small- and Mid-cap biotech companies, they're typically capital consumers are not capital producers. They're particularly sensitive to the current rate environment.Therefore, they're sensitive to spending on pipeline. They're sensitive to M&A. So, as rates come down, we expect more spending on pipeline and more M&A activity, which is generally positive for the sector. Looking forward, biotech sector is generally the best performing sector on a six-to-12-month timeframe post the first rate cut. Terence Flynn: Great. You've also talked about this SMID to Big thesis on the biotech side. Can you explain what's driving that? Sean Laaman: Sure Terence. There’s three pieces to the SMID to Big thematic. So, we in SMID-cap biotech, we cover 80 to 90 companies. About a third of those are newly, kind of profitable companies. Those companies are turning from being capital consumers to capital producers. We see about $15 billion of cash on balance sheets for 2025, going to north of 130 billion by 2030. That's the first piece. The second piece is due to regulatory uncertainty at the USFDA. We're seeing more attractive valuations amongst clinical stage names. That's the second piece. And third piece relates to your coverage, Terence. I refer back to that [$]177 billion of LOE. So, we expect generally that M&A activity will be quite high amongst our sector. Terence Flynn: And let's not forget about AI, which has implications across the healthcare space. How much is this changing the dynamic in biotech, Sean? Sean Laaman: It is changing, but we're really at the beginning. I think there's three things to think about. The first one is faster trial recruitment. The second one is faster regulatory submissions. And the third one, which is the most interesting, but we're really at the beginning of, is faster time to appropriately targeted molecules. Terence Flynn: Great. And maybe lastly, what are the key risks and catalysts for SMID-cap biotech in the current environment? Sean Laaman: As always, we're focused on pipeline failures in terms of risk. Secondly, in terms of risk, we're looking at regulatory risk at the FDA. And thirdly, we're looking at the rise in China biotech and the competitive dynamic there.Whether you're watching large cap biopharma, M&A moves, or the rise of cash-rich, SMID-cap biotechs, the healthcare sector setup is unlike anything we've seen in years.Terence, thanks for speaking with me. Terence Flynn: Always a pleasure to be on the show. Thanks for having me, Sean. Sean Laaman: And thanks for listening. If you enjoy Thoughts on the Market, please leave us a review wherever you listen and share the podcast with a friend or colleague today.

28 Okt 5min

Our CIO and Chief U.S. Equity Strategist Mike Wilson discusses the outlook for stocks after the preliminary U.S.-China trade agreement and ahead of the Fed meeting and big tech earnings.Read more insights from Morgan Stanley.----- Transcript -----Welcome to Thoughts on the Market. I'm Mike Wilson, Morgan Stanley’s CIO and Chief U.S. Equity Strategist. Today on the podcast I’ll be discussing the remaining hurdles for equities after what appears to be a preliminary trade deal with China.It's Monday, October 27th at 11:30am in New York. So, let’s get after it.Over the past few weeks, trade tensions between the U.S. and China escalated once again focused on rare earths and technology transfers with each country playing its strongest card. Over the weekend, it appears that we have at least a preliminary agreement to de-escalate these tensions which means avoiding prohibitively high tariffs that were scheduled to go on at the end of this month. While we don’t have many details on what has been agreed to, it appears that critical rare earths will continue to ship to the U.S. while technology transfer restrictions by the U.S. to China will ease. Presumably, Fentanyl tariffs of 20 percent on China are likely to be part of any broader agreement between Presidents Trump and Xi, if they end up meeting at the upcoming Asia Pacific Economic Cooperation forum.Given the sharp sell-off in stocks a few weeks ago on the news of trade tensions re-escalating, it’s not surprising that stocks are rallying sharply this morning on news of a possible deal from last week’s talks. Our attention now turns to the other big events this week. First, the Federal Reserve is meeting tomorrow and Wednesday to decide its next move on monetary policy. There is a broad consensus view that the Fed will cut another 25 basis points but there are very different views about how they will address its balance sheet run-off known as quantitative tightening, or QT. Based on my conversations, there is a growing consensus view for the Fed to announce the end of QT but uncertainty around the timing. Our house view is for the Fed to wait until the January meeting to make this official with an end of the program in February. Others believe the Fed could announce something as early as this week. That dispersion in expectations does create some room for disappointment from markets, especially given the recent increase in funding market spreads. More specifically, the widening in spreads suggests banking reserves may already be too low and restrictive for the pick-up in economic activity and capital spending that requires more liquidity. Second, earnings revision breadth has rolled over sharply the past few weeks. Most of this decline is due to normal seasonality and the fact that revisions breadth had reached unsustainably high levels since bottoming out in April. Therefore, a reset should be expected as we previewed over a month ago. Nevertheless, it needs to stabilize and push higher again for stocks to continue their advance in my view. Perhaps most importantly for the S&P 500 is the fact that all of the hyperscalers are reporting this week and will likely determine if revision breadth rebounds. It will also be important to see how those stocks react to what is likely to be continued aggressive guidance on AI capex plans. Since April, the hyperscaler stocks have rewarded higher guidance on spending. Should that change, we may see a different tone to how these companies discuss their spending plans. Bottom line, I remain bullish on my 12 month view for U.S. stocks based on what I believe will be better and broader growth in earnings next year. Nevertheless, the near term window remains a bit cloudy on trade, Fed policy shifts and earnings revisions breadth. Stay patient with new capital deployment and look to take advantage of downdrafts when they arise like a few weeks ago. Thanks for tuning in; I hope you found it informative and useful. Let us know what you think by leaving us a review. And if you find Thoughts on the Market worthwhile, tell a friend or colleague to try it out!

27 Okt 3min

Our U.S. Software Analyst Sanjit Singh explains how AI is reshaping software development and why the future for the sector may be brighter – and busier – than ever.Read more insights from Morgan Stanley.----- Transcript -----Welcome to Thoughts on the Market. I’m Sanjit Singh, the U.S. Software Analyst at Morgan Stanley.Today: how AI is transforming software and what that means for developers.It’s Friday, October 24th, at 10am in New York.There's been a lot of news stories and anecdotal accounts about AI taking over jobs, especially in the software industry. You may have heard of vibe coding, where people can use natural language prompts, guiding AI to build software applications. So yes, AI is creating a world where software writes itself. But at the same time, the demand for human creativity only grows.The introduction of AI coding assistants has dramatically expanded what software can do, fueling a surge in both the volume of code and the complexity of projects. But instead of shrinking the developer workforce, AI is actually supporting continued growth in developer headcount, even as productivity soars.We’re estimating the software development market will grow at a 20 percent compound annual growth rate, reaching $61 billion by 2029. And that’s up from $24 billion in 2024. And in terms of the developer population, [research] firms like IDC expect it to jump from 30 million paid developers in 2024 to 50 million by 2029 – that’s a 10 percent annual growth rate. Even the most conservative estimates, like those from the U.S. Bureau of Labor Statistics, see developer jobs growing roughly 2 percent per year through 2033, outpacing overall employment growth.So, what does this mean for people behind the code? AI isn’t replacing developers. It’s redefining them. Routine tasks are increasingly handled by AI agents, and this frees up developers to become curators, reviewers, architects, and most important problem-solvers.The upshot? Companies may need fewer developers for repetitive work, but the overall demand for skilled engineers remains robust. As AI lowers the barrier to entry, the pool of people who can build software applications expands dramatically. But at the same time, the complexity and ambitions of projects rise, keeping experienced developers in high demand.No doubt, AI coding tools are delivering real productivity gains. Some teams are reporting nearly doubling their code capacity and cutting pull request times in half after adopting AI assistants. Test coverage has increased sharply, resulting in 20 percent fewer production incidents for some organizations. But there is a catch with all this AI-generated code. It’s creating significant new bottlenecks downstream.An example of this is code review, which is becoming a major pain point. Many organizations are experiencing pull request fatigue, with developers rubber-stamping changes just to keep up. Some teams now require three reviewers for AI-generated change, compared to just one before. And in terms of automated testing, systems are getting overwhelmed because every change made with AI sets off a complete round of test.Now we estimate productivity gains from AI in software engineering at about 15–20 percent. But in complex projects, the gains are much lower, as the volume of new code often means more bugs and more rework – and hence more human developers.So where do we go from here? In our view, the future isn’t about fully autonomous software development. Instead, large enterprises are likely to favor an integrated approach, where AI agents and human developers work side by side. AI will automate more of the software development lifecycle. And that not only includes coding – which, coding typically accounts for 10-20 percent of the software development effort – but other areas like testing, security, and deployment. But humans will remain in the loop for oversight, design, and decision-making. And as software gets cheaper and faster to build, organizations won’t just do the same work with fewer people – they likely will do more.In short, the need for skilled developers isn’t going away. But it’s definitely evolving. And in the age of AI, it’s not about man versus machine. It’s about man with machine. And so with more software, we see more developers.Thanks for listening. If you enjoy the show, please leave us a review wherever you listen and share Thoughts on the Market with a friend or colleague today.

24 Okt 4min

Our Head of Corporate Credit Research Andrew Sheets wades into the debate around whether the boom in artificial intelligence investment is a warning sign for credit markets. Read more insights from Morgan Stanley.----- Transcript ----- Andrew Sheets: Welcome to Thoughts on the Market. I'm Andrew Sheets, Head of Corporate Credit Research at Morgan Stanley.Today – the debate about whether elevated capital expenditure and AI technology is showing classic warning signs of overbuilding and worries for credit.It's Thursday, October 23rd at 2pm in London.Two things are true. AI related investment will be one of the largest investment cycles of this generation. And there is a long history of major investment cycles causing major headaches to the credit market. From the railroads to electrification, to the internet to shale oil, there are a number of instances where heavy investment created credit weakness, even when the underlying technology was highly successful.So, let's dig into this and why we think this AI CapEx cycle actually has much further to run.First, Morgan Stanley has done a lot of good collaborative in-depth work on where the AI related spend is coming from and what's still in the pipeline. And importantly, most of the spending that we expect is still well ahead of us. It's only really ramping up starting now.Next, we think that AI is seen as the most important technology of the next decade by some of the biggest, most profitable companies on the planet. We think this increases their willingness to invest and stick with those investments, even if there's a lot of uncertainty around what the return on all of this expenditure will ultimately be.Third, unlike some other major recent capital expenditure cycles – be they the internet of the late 1990s or shale oil of the mid 2010s, both of which were challenging for credit – much of the spending that we're seeing today on AI is backed by companies with extremely strong balance sheets and significant additional debt capacity. That just wasn't the case with some of those other prior investment cycles and should help this one run for longer.And finally, if we think about really what went wrong with some of these prior capital expenditure cycles, it's often really about overcapacity. A new technology – be it the railroads or electricity or the internet – comes along and it is transformational.And because it's transformational, you build a lot of it. And then sometimes you build too much; you build ahead of the underlying demand. And that can lower returns on that investment and cause losses.We can understand why large levels of AI capital investment and the history of large investment cycles in the past causes understandable concern. But when tying these dynamics together, it's important to remember why large investment cycles have a checkered history. It's usually not about the technology not working per se, but rather a promising technology being built ahead of demand for it and resulting in excess capacity driving down returns in that investment, and the builders lacking the financial resources to bridge that gap.So far, that's not what we see. Data centers are still seeing strong underlying demand and are often backed by companies with exceptionally good resources. We need to watch if either of these change.But for now, we think the AI CapEx cycle has much further to go.Thank you as always for your time. If you find Thoughts on the Market useful, let us know by leaving a review wherever you listen. And also tell a friend or colleague about us today

23 Okt 3min