Slower capital raising seen for major AI firms amid higher rates, Sonali Basak notes

Slower capital raising seen for major AI firms amid higher rates, Sonali Basak notes
Interest rates hit AI company capital raising

Higher interest rates persisting for a longer period are leading to a repricing in the more exuberant segments of equity markets. Sonali Basak said this environment is making it less surprising to see capital raising slow among major AI companies, especially those with thinner operating margins.

Earlier this year, Sonali Basak reported that all 11 S&P 500 sectors were set to post positive EPS growth, marking the widest earnings breadth since the pandemic period (link). She also covered the U.S. 10-year Treasury auction, where $39 billion was raised at a 5.3 percent yield, a multi-decade high (link). These developments have occurred as market participants adjust to higher rates and shifting funding conditions.

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