Federal Reserve (FED) · Kevin Warsh · CNBC Technology
AI buildout gives tech investors new reasons to watch bond market
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Artificial intelligence is giving tech investors an entirely new reason to pay attention to the Federal Reserve.
Key facts
- Tech investors are not as used to looking at rates," Peter Boockvar, chief investment officer of One Point BFG Wealth Partners, said in an interview
- Amazon, which has forecast spending of roughly $200 billion this year, is widely expected to see negative free cash flow
- It's underappreciated," said Jeff Kilburg, CEO of KKM Financial, adding that there's an "insatiable demand" for AI-related funding
- The firm also expects that capex this year will be closer to $920 billion, and says analyst estimates have been "too conservative" each of the past three years
Summary
For years, megacap tech companies with hefty balance sheets have been able to shrug off rising rates, which tend to weigh more heavily on smaller, less-profitable peers. But companies that were once cash cows are depleting reserves and leveraging debt in their ambitious data center buildouts. "Tech investors are not as used to looking at rates," Peter Boockvar, chief investment officer of One Point BFG Wealth Partners, said in an interview. Warsh held his first press conference as Fed chairman on Wednesday.