BlackRock CEO: There Is No AI Bubble, Rate Cut Is Fully Justified

BlackRock CEO Larry Fink recently commented that the artificial intelligence (AI) sector is not experiencing a speculative bubble. He defended the continued investment in AI infrastructure, emphasizing that the current demand is grounded in real-world application and long-term economic potential. His remarks align with recent market performances from key players like TSMC, which posted record profits driven by AI-related demand.

TSMC reported a 35% year-over-year profit increase for its fourth quarter. The company raised its 2026 capital expenditure forecasts to $52–56 billion, a 30–50% increase compared to 2025. This suggests a strong and sustained demand for AI computing hardware. Analysts from JPMorgan, Barclays, and others have reiterated their positive outlook for TSMC and the broader semiconductor industry.

The AI trade appears to be gaining traction as Wall Street continues to back key components of the ecosystem. Analysts have upgraded their ratings on companies like Broadcom and AMD, noting the sector's transition from heavy investment in AI training to the monetization of AI inference.

Why the Move Happened

TSMC's confidence in the AI market stems from its customer engagement. Company management confirmed that they have directly verified customer demand for leading-edge AI chips, which is expected to remain robust through 2026 and beyond. This validation reduces the risk of overvaluation in the sector and supports the case for long-term investment.

The AI growth trajectory is also being reinforced by structural trends. UBS analysts noted that AI innovation remains a key driver of equity performance, especially as companies demonstrate tangible revenue and profit gains from their AI investments.

How Markets Responded

Following TSMC's results, several AI-related stocks experienced upward momentum. Nvidia and Broadcom saw gains of around 3% and 1%, respectively, while the VanEck Semiconductor ETF (SMH) hit a 52-week high. The market's positive reaction reflects strong investor confidence in the AI ecosystem's growth potential.

BlackRock's stance, along with strong earnings reports from key players, has helped stabilize investor sentiment. Despite short-term volatility in the fourth quarter, analysts expect AI-driven earnings to contribute significantly to broader market performance in 2026.

What Analysts Are Watching

Analysts are closely monitoring the rate at which AI infrastructure spending translates into profit growth. For example, C3.ai recently exceeded its Q2 2026 earnings expectations, with EPS of -$0.25 versus a forecast of -$0.33. Subscription revenue grew 16.5% quarter-over-quarter, and the company maintained a strong cash position despite a non-GAAP operating loss.

While some firms in the AI space face challenges with unit economics and profitability, the sector's long-term fundamentals remain compelling. Investors are advised to focus on companies that can demonstrate clear monetization paths and scalable AI applications.

Market observers are also watching how AI adoption in consumer electronics and enterprise software evolves in 2026. Samsung, for example, is embedding AI across its product lines, including home appliances and mobile devices. The company's India strategy and R&D investments in AI suggest a broader shift in consumer and business markets.