BlackRock and Deutsche Bank CEOs Put Deficits Ahead of AI Bubble Fears

BlackRock CEO Larry Fink and Deutsche Bank CEO Christian Sewing see government borrowing and competition for investment capital as more immediate market concerns than fears of a broad AI bubble. The U.S. deficit is near $2 trillion, while Treasury yields have reached levels not seen in decades.

Fink said delays in building AI data centers could threaten economic growth. High computing costs could also add to inflation. He argued that expanding data-center capacity sooner would increase computing power and help reduce its cost. Competition for capital, he said, is fiercer than at any other point in his career, as AI companies seek funding alongside governments.

Sewing said he sees no reason to expect a sharp near-term reversal in asset prices, although individual companies may face setbacks. He does not consider the market a bubble on the verge of bursting and pointed to geopolitical tensions as a source of volatility. He also described industrial uses of AI as a major opportunity for Germany if the country has the right regulatory framework.

Steve Chiavarone, Federated Hermes’ global equity chief investment officer, said investors concerned about an AI bubble may be right but several years early. Infrastructure investment could continue for years before the risk of overbuilding becomes more pressing. He said markets are distinguishing between companies that can secure financing and those that cannot, as well as the rates they must pay.

Sewing said rising risks around French government debt do not yet amount to a debt crisis. He said the situation should draw attention to public finances and the need for budget discipline.