"We think valuations look high, but they actually are driven by fundamentals," BlackRock's Alex Brazier tells Bloomberg Television. He also adds the artificial intelligence theme is "broadening out."

The release of Open AI's ChatGPT has accelerated the development of artificial intelligence and warnings about its impact on society.

Rise of AI

Ben Brazier of BlackRock stated that artificial intelligence is not experiencing a market bubble, as current high valuations are supported by strong fundamentals and robust earnings growth. He emphasized that core AI companies are well-positioned to grow into their valuations, and the market is becoming more selective within the sector.

Brazier also highlighted that the AI theme is broadening, with increased demand for energy and growing interest in clean and sustainable power sources. While some investors remain cautious due to volatility and optimistic assumptions underlying valuations, others are seeking tactical strategies to manage risk and capitalize on opportunities in sectors adopting AI.

AI not in a bubble, BlackRock's Brazier says

One of the big debates has of course been, is AI in a bubble? We really don't think so. We think valuations look high, but they actually are driven by fundamentals and many of the core – companies at the core of the AI theme have every opportunity to, if you like, grow out of those valuations. Now, the market is becoming though more discerning within the core of the AI theme. So, we actually think it's worth spending active security selection budget on that part of the market. But also, the AI theme is broadening out. We've just talked about power demand coming from it. We've seen great interest from many investors into clean energy, sustainable energy, energy of any sort, which is going to be needed to power the AI revolution. And that's where one of the bottlenecks is. Plus, as Matt was talking, at some point, this will become adopted more broadly in the wider economy. That will help to support the surge in productivity that we're seeing. It's helping to deliver a broadening of earnings growth into the broader US economy. So, we've been tactically overweight US equities for quite some time as the market broadens out as it's doing at the moment. But at the same time, Alex, I mean, how can you tell when there's going to be a bubble? Because valuations just keep on rising. And every time we have constructive news from TSMC or NVIDIA, everything's fine. But at some point, it's got to match what you're spending. I would push back on valuations keep rising. Actually, valuations for the mega caps have fallen. Earnings growth has been so strong that actually we ended 2025 valuations slightly lower. So, again, it's not really a bubble. It's sort of fundamentals driven. Now, the question is, will the hyperscalers in the long run be the ones who actually earn the most from all of this? Or will the benefits be more diffused across the economy? And that actually leads to opportunities we think beyond what's worked well so far. So, we're thinking about the sectors in the US economy that have the opportunity to adopt AI and deliver productivity improvements. But lots of investors are nervous about volatility at these valuations. And when we survey investors across Europe, they're pretty polarised. When we say, do you want to add to US exposure or subtract from US exposure? They say, yes. But they're pretty evenly split between both of those options. And for the camp that's looking to reduce US exposure, they are worried about the high level of valuations, not because it's a bubble, but because they rest on some optimistic assumptions. And so, they're looking, for example, at buffering their US exposure, giving up some upside to cap the downside. They're looking at tactical opportunities type strategies that are going to be pretty nimble through the course of the year to deal with that volatility.

The United States on Thursday said Iran halted 800 executions of protesters under pressure from President Donald Trump, after Gulf allies appeared to pull him back from military action over Tehran's deadly crackdown on demonstrations.

Tehran

U.S. claims Iran halts executions of protesters amid crackdown

Venezuelan opposition leader María Corina Machado met with President Donald Trump on Thursday at the White House. She presented Trump with her Nobel Peace Prize medal, which was seen as a peace offering to win his support.

Washington

Venezuela Strikes

Venezuelan opposition leader presents Trump with her Nobel Peace Prize

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Nuuk

NATO troops head to Greenland amid Trump's threats

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Cape Canaveral

Final preparations for Artemis II launch underway

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Seoul

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Minneapolis

Trump threatens to use military against Minneapolis protests

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Iran, U.S. clash at UN over protests as calls grow for restraint

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Tel Aviv-Yafo

U.S. backs Palestinian civil engineer to administer Gaza

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Jerusalem

Middle East Conflict

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Kyiv

Ukraine Invasion

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Several European countries and NATO allies send troops to Greenland

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California

Musk's xAI curbs Grok image editing after concerns

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United States completes first sale of Venezuelan oil

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Sikhio District

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Ottawa

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Vero

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London

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AI not in a bubble, BlackRock's Brazier says

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Rise of AI