Analyst Flags Two Stocks to Buy as AI Funding Worries Mount

Financing questions are starting to bite into the AI trade. An analyst at a major bank just put out a note naming two stocks worth owning through the uncertainty.

Why Funding Fears Are Hitting Now

AI buildouts require serious cash. Data centers, chips, power infrastructure — the bills keep climbing. Some smaller players have already seen their borrowing costs rise. That shift caught a few leveraged names off guard last month.

Yet the analyst argues the biggest balance sheets remain untouched. Companies with steady cash flow and modest debt can keep spending without tapping expensive markets. That distinction matters when rates stay higher for longer.

The Two Names on the List

One pick sits in enterprise software with recurring revenue that funds its own AI upgrades. The other operates in industrial tech where AI demand is rising but capital needs stay contained. Both carry investment-grade ratings and dividend yields above the sector average.

Markets have not rewarded either stock much this quarter. Shares in both names went sideways while pure-play AI plays ran higher. That lag is exactly why the analyst sees value.

Macro Backdrop Still Matters

Fed speakers have kept the door open to further hikes if inflation reaccelerates. Higher for longer would raise the cost of any new debt. Tech firms that funded expansion with cheap money five years ago now face very different math.

Still, corporate earnings have held up better than many expected. Cash generation at the largest names remains robust. That gives them room to keep investing even if bond spreads widen.

What Traders Are Doing

Positioning data shows hedge funds have trimmed some AI-heavy exposure but have not rotated out entirely. The two recommended stocks have seen modest inflows from long-only funds seeking defensive growth. Volume stays light, suggesting few are chasing the names aggressively.

Not everyone agrees. Some portfolio managers worry that any slowdown in AI capex will hit suppliers across the board. They prefer to wait for clearer signals on earnings before adding exposure.

Two Sides of the Trade

Bulls say the analyst’s picks offer asymmetric upside. If AI spending holds, the companies still benefit. If financing tightens, their strong balance sheets become a relative advantage. The dividend provides a cushion either way.

Bears counter that valuations already price in a soft landing. Any miss on growth or a fresh round of rate volatility could send both stocks lower in tandem with the broader market. The call assumes no major recession, an assumption that remains untested.

Watch your position sizing here. Even defensive tech can move sharply on macro surprises.