TechFlow, Sept. 26 — According to Jinshi Data, Panmure Liberum strategist Joachim Klement said tech giants are pouring massive funds into artificial intelligence, driving sustained gains in U.S. equities. However, rising long-term U.S. Treasury yields are threatening the investment boom in infrastructure such as data centers. The challenge facing the AI investment surge is that the enormous capital required must be raised through financing, with a significant portion dependent on debt. Since 2023, long-term Treasury yields have risen markedly (except for a recent pullback) and could continue climbing into 2026. This would increase borrowing costs, rendering some investment projects unprofitable.
Data shows that for every 1 percentage point rise in long-term Treasury yields, IT equipment investment growth could decline by 0.6 percentage points, while software investment growth could fall by 0.4 percentage points. Higher Treasury yields may not completely stifle growth, but they will inevitably slow it down. Given that current valuations already reflect overly optimistic expectations, this could prompt markets to revise downward earnings forecasts for hyperscalers and other growth stocks.
