Benzinga and Yahoo Finance LLC may earn commission or revenue on some items through the links below. Robinhood Market (NASDAQ:HOOD) CIO Stephanie Guild says the artificial intelligence boom may keep driving stocks to fresh records, but its enormous appetite for capital is creating a new threat to the rally: a 10-year Treasury yield above 5%. Speaking to Bloomberg on Friday, Guild said the largest technology companies are funding an "expansion of intelligence" that is accelerating the market, while competing with Washington for increasingly expensive capital.
Asked whether stocks could continue to climb from record levels, Guild said, "I agree with that." Guild argued that investors still aren't fully buying into the AI spending boom. She said earnings growth expectations for 2026 have doubled, while the S&P 500's valuation multiple has fallen and expectations for 2027 have barely moved. She pointed to Applied Materials Inc. (NASDAQ:AMAT) as an example.
The chip-equipment maker was set to open lower Friday despite beating Wall Street estimates, as investors continued to question whether enormous AI capital spending will generate sufficient returns. "I think it is fair," Guild said of those concerns. "And I think that skepticism allows the market to continue to rip." The AI boom itself requires enormous amounts of capital, and Guild said that demand is increasingly colliding with Washington's own borrowing needs.
Bloomberg anchor Guy Johnson noted that AI companies are issuing debt, major technology firms are taking on more financing activity and the U.S. government still has huge amounts of debt to sell. Guild said that competition for capital is one reason Treasury yields are rising. Thursday's 30-year auction cleared at the highest yield since 2001 despite solid demand.
"One of the big risks [is] that you could see the 10-year going beyond 5%," she said. Rates at that level may keep valuations lower and slow how quickly the AI buildout can happen, she added. That is the paradox at the heart of her outlook.
The industry powering the rally may need so much money that it drives up the cost of the money it needs. Guild compared the recent Situational Awareness blowup to Long-Term Capital Management in 1998, describing that episode as a market-clearing washout rather than an omen of worse to come. Stocks climbed another 35% after LTCM before the dot-com bust arrived, she noted.
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