📌 AI Hardware Faces Rotation as Oil Prices and Interest Rates Rise
As oil prices break above USD 109 and the 10-year U.S. Treasury yield reaches 5%, high-valuation AI hardware stocks come under pressure, but U.S. stock indexes are not down by much. The S&P 500 is down about 0.6%, the Nasdaq is down 0.8%, and the Dow is down 0.3%. This looks more like a reshuffling of positions within the equity market than an indiscriminate withdrawal of funds from risk assets.
The pressure is mainly falling on AI hardware, which is more sensitive to valuations. On one side, oil prices and long-term interest rates are rising; on the other, calls have emerged to slow the development of frontier models. When these two changes occur simultaneously, investors become more cautious toward high-valuation assets that depend on long-term growth expectations. Funds are instead flowing into energy stocks and software stocks that had previously been pressured by concerns over AI replacement.
At the same time, both mega-cap technology and defensive sectors have rebounded. Google has returned above 340, Microsoft is nearing 500; HDV is up 1%, McDonald’s is up 2%, and Hershey is up 1.5%. This combination indicates that some funds remain in the equity market, merely choosing again among mega-cap technology, energy, and defensive assets.
There is still insufficient evidence to directly regard weakening demand for semiconductors and technology capital expenditures as a deterioration in fundamentals. The related view holds that this round of selling is driven more by sentiment. Going forward, it will be necessary to watch whether oil prices and long-term interest rates can continue rising, and whether AI hardware orders and capital expenditure data weaken in tandem, before determining whether the rotation will develop into a deeper sector downgrade.
▌ Sources