UBS warned that if bond yields continue to rise and begin to suppress the stock market, the US stock market may be one of the weakest markets in developed markets, especially stocks related to the artificial intelligence industry chain. UBS HOLT analyst Michel Lerner said that the Middle East crisis, inflation, fiscal concerns, and huge demand for debt financing in the AI supply chain have pushed government bond yields to high levels since before the global financial crisis, while US stock valuations are still at a high level. UBS pointed out that the current stock prices of many AI value chain companies imply record future cash flow expectations, so they are particularly sensitive to rising capital costs, which also makes the US the “longest lasting” stock market among developed economies. At the same time, higher interest rates will raise the return threshold for growth projects, which are particularly bad for AI infrastructure spending, which is already facing doubts about return on investment. UBS suggests that in a high interest rate environment, investors should give priority to companies with strong competitive barriers, stable balance sheets, and low long-term risk, and be cautious about companies with high valuations and capital expenditure exceeding internal cash generation capacity.

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