Temasek Chief Investment Officer warns: AI trading reversal is the biggest market risk, turbulence may occur in 2027

Golden Ten Data APP has learned that Singaporean state-owned investment giant Temasek stated that a reversal in artificial intelligence trading is the greatest risk facing the market.

Temasek Chief Investment Officer Rohit Sipahimalani said, "We don’t see this as an imminent issue, but could there be volatility in 2027? Yes, it’s possible."

Sipahimalani said that even if US Treasury yields rise sharply, AI remains one of the key factors supporting US stocks near record highs, noting that large companies related to this technology are delivering strong earnings performance.

He pointed out that despite rising borrowing costs, the S&P 500 Index is still hovering near record highs, supported by "AI and the earnings momentum surrounding the leading players."

However, the strength of the index masks underlying weakness. Sipahimalani noted that about half of the components in the Russell 3000 Index have fallen at least 20% from their June peaks, highlighting how much the market’s resilience relies on a handful of winners.

He said a reversal in AI trading could be triggered by multiple factors, including safety concerns that lead to regulatory tightening or signs that clients’ investments in this technology are not generating sufficient returns.

Nevertheless, Temasek remains long-term bullish on artificial intelligence and continues to increase its investments in this field. Sipahimalani said about half of the company’s current AI exposure is allocated to publicly traded assets, ideally aiming to raise this proportion to around 70% to 75%.

Compared to private assets, which are harder to exit quickly, this will give Temasek greater flexibility to adjust investments as the industry evolves.

"One thing we recognize is that AI is an extremely fast-moving environment where things can easily change, and you have to be able to pivot," he said.

Temasek has invested in private AI model developers such as OpenAI and Anthropic, but "the scale of exposure in these areas is different from some areas where we have greater flexibility," said Sipahimalani.