Edwards Warns Liquidity and Inflation Could Pressure AI Stock Rally

Société Générale strategist Albert Edwards warned that tightening liquidity and inflation pressures could threaten the AI-driven stock rally, as technology earnings revisions and analyst upgrades lose momentum.

Edwards said dwindling financial support for risk assets could weigh on equities, including semiconductor shares. The warning comes despite strong profit-growth forecasts.

The breadth of analyst upgrades and the pace of technology earnings revisions have weakened, Edwards said. He also flagged short-term inflation measures and corporate output-price inflation as concerns.

Edwards raised the possibility of rate increases exceeding 200 basis points but gave no formal forecast or timetable. He has also drawn a comparison between the AI investment boom and the period before the 1997 Asian financial crisis, pointing to heavy spending and limited productivity gains.