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Investment Monthly: Staying invested in AI, but quality and selectivity matter

1 November 2026

Willem Sels

Global Chief Investment Officer, HSBC Private Bank and Premier Wealth

Lucia Ku

Global Head of Wealth Insights, HSBC International Wealth and Premier Banking 

Key takeaways

  • Semiconductor companies have recently sold off amid concerns over the sustainability of their earnings growth. Yet, accelerating AI adoption presents significant opportunities across the AI ecosystem, with hyperscalers and AI adopters benefitting from cheaper computing, productivity gains and new revenue streams. Differentiation is key to identifying winners and laggards. We continue to diversify across IT, Materials, Energy and Financials globally.
  • While Asia offers AI-led growth and structural opportunities, varying economic momentum and valuations call for selectivity. We favour South Korea and Japan for their AI exposure, while Hong Kong benefits from robust liquidity inflows and IPO activity. We downgrade Singapore to neutral following strong gains and stretched valuations. Elsewhere, high capex requirements and borrowing costs lead us to downgrade global and European Utilities to neutral.
  • G7 bond yields remain elevated due to inflation concerns, fiscal pressures and rising bond supply to support AI funding needs. We continue to lock in attractive yields from quality bonds, as lower-rated borrowers face greater stress in a high-for-longer interest rate environment. While French fiscal risks have tightened financial conditions, they do not materially undermine market fundamentals. Recent equity market volatility reinforces the diversification benefits of bonds. We prefer medium maturities (5-7 years) in investment grade credit.

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