AI’s 3 musketeers hit the brakes: Why Chris Wood sees midcaps back in favour
India’s domestic economy is showing resilience despite geopolitical and energy risks, with stronger bank credit, corporate lending and earnings growth. Jefferies’ Chris Wood sees a potential reversal in the AI trade as another catalyst for global investors to refocus on India. He also favours mid- and small-caps, while highlighting domestic flows, gold loans and energy risks as key market drivers.
AI's three leading figures, Dario Amodei, Sam Altman, and Elon Musk, are suddenly expressing caution about the AI trade. Jefferies' Chris Wood believes that if this momentum fades, global investors may once again turn their attention to India, whose growth story has remained robust amid the dominance of tech giants in emerging markets.
Wood writes in his latest GREED & Fear newsletter that the AI narrative needs to "blow up" before India can become a primary focus for emerging market equity investors. Currently, TSMC, Samsung Electronics, and SK Hynix account for 29% of the MSCI Emerging Markets Index, compared to India's 11%. However, India's credit growth is robust at 19.1%, corporate lending is accelerating, and earnings growth is expected to improve, making the country's domestic resilience difficult for investors to ignore.
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