Tech stocks have done exceptionally well this year and that outperformance will likely continue for another six months, as per nearly half of the CFOs who participated in a recent CNBC survey.
Still, only 3.0% of the chief financial officers said their companies were spending on new AI capabilities even though Statista forecasts artificial intelligence to be a $1.0 trillion market over the next ten years.
These top executives named consumer demand, regulation, and monetary policy as possible risks for their businesses but remained bullish on the stock market, expecting further upside in the Dow Jones Industrial Average that’s already at a record high at writing.
Capex to remain put despite interest rate cuts
The US Federal Reserve lowered its key interest rate by 50-basis points this month and signalled another 50-bps of rate cuts by the end of 2024.
Typically, interest rate cuts result in increased capital expenditures as they make it cheaper for companies to borrow money for growth and expansion.
Still, only 7.0% of those who participated in CNBC’s third-quarter CFO Council survey projected higher CAPEX moving forward.
Responding to how their businesses will spend capital, more than 25% said building new factories will be a top priority while tech investments “not” related to AI was the second most common answer.
Note that as much as 66% of the participating financial decision makers expect the 10-year to remain between 3.0% and 4.5% over the next six months.
CFOs predict Kamala Harris will outshine Donald Trump
According to the CNBC survey, over 50% of the chief financial officers expect Donald Trump’s policies to be more effective in defeating inflation while stimulating the economy.
Still, more than half of them are convinced that Kamala Harris will come out victorious in the 2024 US presidential elections scheduled for November.
Also on Thursday, a separate survey conducted by UBS revealed well over 50% of the wealthy investors in the US plan on voting for Harris.
These millionaire investors dubbed economy as currently the top issue and much like the CFOs, more than half of them also picked Donald Trump as “better equipped to address the economy.”
But Joel Naroff – president of Naroff Economics has a different opinion altogether.
Responding to another CNBC survey, he wrote:
Assuming Trump intends to follow through on his proposals, a broad-based tariff and a mass deportation, would raise inflation and slow the economy to the extent that a recession would likely follow.
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