HSBC's Frederic Neumann Sees Three Risks to the AI Boom

HSBC Global Investment Research chief Asia economist and co-head of Asia Frederic Neumann said the AI boom is a major driver of global growth, but warned that rising government bond yields, energy prices and social risks could increase market volatility, according to Jiemian News. He said U.S. growth is currently reliant on AI hardware investment, while GDP growth in Asia is also becoming more dependent on the trend. Neumann said U.S. 10-year Treasury yields rose to 4.79% on September 1, the highest since January 2025, and that further increases could marginally reduce the profitability of companies investing in AI and affect equity valuations. He added that he does not expect an AI bubble to burst soon, but said a cooling in the sector could still prompt investors to reassess long-term return expectations. He also cited elevated energy prices after global market disruptions in the first half of the year, as well as labor-market and safety risks tied to AI, and said China has taken active steps to address these challenges.