Steve Chiavarone, Chief Investment Officer for Global Equities at Federated Hermes, says the artificial intelligence investment cycle has several years to run before bubble risks become a serious concern. He argues that capital is flowing toward concrete needs, including data centers, semiconductors, and power generation, which supports rational capital allocation. Federated Hermes raised its S&P 500 earnings estimates, projecting year-over-year earnings-margin growth of approximately 9% in mid-2026. Chiavarone acknowledges that valuations are elevated but says they do not yet signal an imminent collapse.
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