A macro investor with over 30 years of experience believes that AI will boost balance sheets in the same way the Fed’s quantitative easing (QE) once did for Corporate America.
In a new video update, Jordi Visser says the profit dynamics behind AI resemble the post-2008 crisis period when quantitative easing boosted margins by cutting costs and driving operating leverage.
According to Visser, investors should focus on the big picture benefits of AI instead of obsessing over bubble signs.
“This is why I talked about the fact that QE is basically artificial intelligence in terms of the fact that we’re going to be getting so many profit margins from the fact of reducing expenses, and there’s an operating leverage multiplier on it.”
He also points to rising credit stress around CoreWeave, noting that market-based default odds now sit at elevated levels. Visser says the stress does not mean AI is in a bubble, but reflects the credit market pricing in risk. The macro investor adds that the US is in a K-shaped economy where fundamentally strong companies will pull away, while weaker firms face real pressure.
“CoreWeave CDS. This was brought up to me this week. Building in a roughly 40 to 45% chance to accommodate defaults over the next five years. I don’t have a problem with this at all. Do I think this is too high? Yeah, but do I think there’s a 30 to 35% chance the company will have defaults over the next five years? As someone who’s as bullish as I am on AI, yes.
This is part of the thing that I think people have to expand. Number one, we’re in a K-shaped economy, which means I don’t expect the credit situation, the job situation to get any better. That is part of the bullish outlook for me with stocks and profit margins.”
Credit default swaps (CDS) serve as insurance against a company failing to meet its debt obligations.
Visser also looks at the exploding price of Oracle CDS, noting that it is not evidence of a sector-wide bubble but a sign that the credit market is pricing the debt loads realistically.
“So, I don’t have a problem with the CDS being up there. It doesn’t mean we’re in a bubble. It just means the credit market is starting to get smart with the fact that they may not be able to justify all the debt they’re taking. Same thing with Oracle CDS.”
Disclaimer: Opinions expressed at CapitalAI Daily are not investment advice. Investors should do their own due diligence before making any decisions involving securities, cryptocurrencies, or digital assets. Your transfers and trades are at your own risk, and any losses you may incur are your responsibility. CapitalAI Daily does not recommend the buying or selling of any assets, nor is CapitalAI Daily an investment advisor. See our Editorial Standards and Terms of Use.