Federated Hermes CIO says AI boom has years to go before bubble risks

Everyone on Wall Street seems to have an opinion on whether artificial intelligence is a bubble. Steve Chiavarone’s opinion is that the question is early. Chiavarone, Chief Investment Officer for Global Equities at Federated Hermes, said on October 21, 2026, that the current AI investment boom still has years to run before bubble risks become a serious concern. The case for patience His argument rests on where the money is actually going. The spending he points to covers data centers, semiconductors and power generation. Chiavarone said this infrastructure buildout is encouraging rational capital allocation. He noted that markets are currently being discerning, steering financing toward stronger companies. He contrasted that with how bubbles have historically behaved. In those episodes, financing tended to be indiscriminate, with cheap money available to nearly everyone regardless of quality. Chiavarone said he sees no signs of systemic bubble behavior, since capital keeps flowing to the firms that can best use it. Earnings are doing the heavy lifting Federated Hermes has also put numbers behind its optimism. The firm raised its S&P 500 earnings estimates, pointing to continued...