Robinhood Exec Says AI Boom Could Keep Stocks Ripping Higher but Bonds Could Crash the Party

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Robinhood Market (NASDAQ:HOOD) CIO Stephanie Guild says the artificial quality roar whitethorn support driving stocks to caller records, but its tremendous appetite for superior is creating a caller menace to the rally: a 10-year Treasury output supra 5%.

Speaking to Bloomberg connected Friday, Guild said the largest exertion companies are backing an "expansion of intelligence" that is accelerating the market, portion competing with Washington for progressively costly capital.

Why Guild Thinks Stocks Can Keep Ripping

Asked whether stocks could proceed to ascent from grounds levels, Guild said, "I hold with that."

Guild argued that investors inactive aren't afloat buying into the AI spending boom. She said net maturation expectations for 2026 person doubled, portion the S&P 500's valuation aggregate has fallen and expectations for 2027 person hardly moved.

She pointed to Applied Materials Inc. (NASDAQ:AMAT) arsenic an example.

The chip-equipment shaper was acceptable to unfastened little Friday contempt beating Wall Street estimates, arsenic investors continued to question whether tremendous AI superior spending volition make capable returns.

"I deliberation it is fair," Guild said of those concerns. "And I deliberation that skepticism allows the marketplace to proceed to rip."

AI's Capital Needs Could Become the Problem

The AI roar itself requires tremendous amounts of capital, and Guild said that request is progressively colliding with Washington's ain borrowing needs.

Bloomberg anchor Guy Johnson noted that AI companies are issuing debt, large exertion firms are taking connected much financing enactment and the U.S. authorities inactive has immense amounts of indebtedness to sell.

Guild said that contention for superior is 1 crushed Treasury yields are rising. Thursday's 30-year auction cleared astatine the highest output since 2001 contempt coagulated demand.

"One of the large risks [is] that you could spot the 10-year going beyond 5%," she said. Rates astatine that level whitethorn support valuations little and dilatory however rapidly the AI buildout tin happen, she added.

That is the paradox astatine the bosom of her outlook. The manufacture powering the rally whitethorn request truthful overmuch wealth that it drives up the outgo of the wealth it needs.

Expect Faster Booms and Faster Crashes

Guild compared the caller Situational Awareness blowup to Long-Term Capital Management successful 1998, describing that occurrence arsenic a market-clearing washout alternatively than an omen of worse to come.

Stocks climbed different 35% aft LTCM earlier the dot-com bust arrived, she noted.