Markets outlook still optimistic due to AI presenting opportunity for continued growth – analyst

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Janus Henderson portfolio manager Jeremiah Buckley remains optimistic about market trends despite macroeconomic concerns, pointing to broad-based earnings growth across multiple sectors.

The S&P 500 (SP500 [https://seekingalpha.com/symbol/SP500]) is up 16% year-to-date with earnings growth of 13%, he noted in an interview with CNBC.

While AI infrastructure has shown “substantial growth” throughout the year, Buckley highlighted that other sectors including commercial aerospace, travel, credit card companies, and capital markets are also contributing to overall earnings expansion.

Consumer spending continues to show resilience, according to Buckley’s analysis of financial data from major payment processors. “We spent a lot of time with Visa (V [https://seekingalpha.com/symbol/V]) and Mastercard (MA [https://seekingalpha.com/symbol/MA]) on their reports, and they continue to see consistent trends,” he said.

He also referenced Costco’s (COST [https://seekingalpha.com/symbol/COST]) recent report of 6.6% U.S. comparable sales as “another indication that consumer spending is still strong.”

The outlook for AI investment remains positive, with strong demand signals emerging from recent earnings reports, he added.

“The commentary around demand coming out of earnings continues to be very strong. We had AMD (AMD [https://seekingalpha.com/symbol/AMD]) report yesterday, also strong GPU sales and a strong outlook going forward,” Buckley said.

He expressed confidence that hyperscalers can fund ongoing AI capital expenditures through their cash flow, while companies like Oracle (ORCL [https://seekingalpha.com/symbol/ORCL]) are successfully accessing bond markets for additional funding.

Buckley believes AI’s impact on corporate productivity is already becoming evident in financial results.

“You’ve seen margins continue to expand across a number of different companies and industries, and I think that’s attributed to the productivity that companies are seeing in their operating expenses, partly attributable to AI,” he explained.

He noted that large enterprises with substantial R&D budgets, such as JPMorgan (JPM [https://seekingalpha.com/symbol/JPM]), are beginning to realize operational benefits from their AI investments.

The portfolio manager projects a long runway for AI-driven productivity gains that will bolster corporate earnings for years to come.

“I still think it’s early days. I think we have years of this productivity acceleration that will continue to contribute to earnings growth going forward,” Buckley concluded.

His optimistic outlook suggests that despite near-term economic uncertainties, the fundamental expansion of AI use cases across industries presents a significant opportunity for continued market growth.

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