AI-driven profit growth may benefit industrials, infrastructure, emerging markets: Report

NEW DELHI: Despite a complex macro backdrop and volatile inflation, AI-driven performance and broadening profit growth could benefit tech-adjacent sectors such as industrials and infrastructure, as well as emerging markets, according to a report by HSBC Asset Management.

The fund house noted in its report, US-Iran Memorandum of Understanding has helped to ease geopolitical tensions, with Oil prices falling below late February levels. At the time of reporting, Brent crude was trading at around USD 84.75 per barrel while crude oil was trading at around USD 81.02 per barrel.

Additionally, the supply constraints in non-oil commodities have also eased. “This should reduce tail risks for global growth and inflation,” it noted.

New Federal Reserve Chair Kevin Warsh has adopted a hawkish stance, but a sharp decline in oil prices could create room for modest Fed easing in 2027, as per the fundhouse.

Meanwhile, the report highlighted, the AI investment boom is offsetting weaker conditions elsewhere, with growth expected to broaden as strong corporate profits support non-tech capital spending and lower energy prices boost consumption. European growth remains subdued, while Asia’s AI-led industrial upcycle faces energy constraints, it said.

According to HSBC Asset Management, AI had continued to drive market earnings and performance, but tech-adjacent sectors such as industrials and infrastructure could emerge as the next leaders. This broadening trend may benefit emerging markets, further supported by moderating oil prices.

“The global economy faces complex supply shocks and spiky inflation, but strong corporate profits are enabling markets to shake off these concerns. The confusing macro landscape means episodic volatility is expected,” it noted.

The fund house suggests investors diversify the diversifiers amid a positive stock-bond correlation, stressing, “Higher yields in bond markets mean that “diversified income” opportunities have improved in fixed income and defensive equity sectors.”

Noting the Asian markets, the report highlighted that varying exposure to AI and the energy shock is driving differences in the pace and scale of policy support.

“Global indices have advanced in 2026, supported by strong profit growth from the AI boom and steady real rates, with “broadening out 2.0″ expected to drive AI spillovers into sectors such as industrials and infrastructure,” it said. (ANI)