AI Quarterly 4Q25: Hallucinations vs. Reality
Winnie Cisar - Global Head of Strategy, ÂÒÂ׶ÌÊÓƵ
Zachary Griffiths, CFA - Head of IG & Macro Strategy, ÂÒÂ׶ÌÊÓƵ
Erick Vega, CFA - Senior Analyst, Americas ex-US Telecom & Telecom Infrastructure, ÂÒÂ׶ÌÊÓƵ
Jordan Chalfin, CFA - Head of Technology, ÂÒÂ׶ÌÊÓƵ
Andy DeVries, CFA - Head of Investment Grade, Head of Utilities, ÂÒÂ׶ÌÊÓƵ
Andrew Moulder - Head of Utilities, ÂÒÂ׶ÌÊÓƵ
Andy Li, CFA - Senior Analyst, Technology, ÂÒÂ׶ÌÊÓƵ
Stephanie Sim, CFA - Analyst, Strategy and East Asia Corporates, ÂÒÂ׶ÌÊÓƵ
Miguel Silvestri - Senior Analyst, Industrials, ÂÒÂ׶ÌÊÓƵ
Jim Williamson - Senior Analyst, Autos, ÂÒÂ׶ÌÊÓƵ
Wen Li, CFA - Head of Metals & Mining, ÂÒÂ׶ÌÊÓƵ
Shreyas Nampoothiri - Analyst, ÂÒÂ׶ÌÊÓƵ
Brian Perez - Analyst, Credit Strategy, ÂÒÂ׶ÌÊÓƵ
27 January 2026
- Why AI investments performed dramatically differently across equity versus credit markets in recent periods.
- Which subsectors and specific issuers emerged as relative winners and losers within the AI ecosystem.
- How power capacity constraints are reshaping data center expansion plans and utility load growth trajectories.
- What hyperscalers’ accelerating infrastructure spending means for semiconductor suppliers, industrial companies, and commodity producers.
- Where macro forces including labor displacement, productivity gains, and market concentration risks could materialize across sectors.
Executive Summary
Equity investments in AI have outperformed credit markets recently in relative terms. Technical pressure from bond issuance and deteriorating metrics concern credit investors.
Estimates of AI impact on GDP growth vary widely across different methodologies. The economy appears less dependent on AI than headlines suggest currently.
Credit markets fund AI expansion but recent tech deals warrant caution. Supply needs may challenge market absorption capacity and valuation expectations going forward.
Utilities, data centers, industrials, and mining show positive credit sentiment currently. Demand for compute infrastructure creates tight supply conditions across multiple sectors.
Semiconductors and networking face neutral sentiment while hyperscalers face negative outlook. However, massive infrastructure spending weighs on cash generation and credit quality.
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