BlackRock Bets on AI Over Credit Risk

BlackRock upgrades developed-market equities on a strategic basis, arguing that AI-driven earnings momentum increasingly outweighs concerns over inflation, geopolitical fragmentation, and higher rates. 

• BlackRock shifts growth exposure toward equities while downgrading high yield to neutral, preferring participation in AI-driven upside rather than fixed coupon income.
• The firm sees AI broadening beyond U.S. mega-cap tech, benefiting sectors tied to semiconductors, power demand, infrastructure, healthcare, and energy.
• Long-duration government bonds remain under pressure as inflation persistence, rising term premia, and geopolitical supply shocks keep yields elevated.
• Emerging markets linked to AI supply chains — particularly Taiwan and South Korea — remain favored alongside commodity-exporting economies.

The report frames markets as increasingly shaped by competing “mega forces”: AI productivity gains on one side, fragmentation and inflationary pressures on the other.