Temasek CIO Is Watching Two Risks to Global Markets in 2027, and AI Tops the List

Temaseks investment chief called an artificial intelligence (AI) trade unwind the biggest risk facing global markets. Yet, the firm still plans to more than double its AI allocation by 2031. Rohit Sipahimalani made the comments at the Milken Asia Summit 2026 in Singapore on Wednesday. He also flagged a second risk for equities and a planned shift in how Temasek holds its AI stakes. Temasek Investment Chief Warns of Two Key Market Risks for 2027 Sipahimalani does not see an AI unwind as imminent, though he said markets could face bumps in 2027. The unwinding of the AI trade is the biggest riskWe dont see that as imminent. But, will you have bumps in 2027, possibly yes, he said. Those bumps would matter for Temasek, whose gains have leaned heavily on AI so far. The S$518 billion ($405 billion) investment firm holds positions in several leading AI firms, among them OpenAI, Anthropic, and Nvidia. It also plans to lift AI-related investments from 6% of its portfolio to up to 15% by 2031. Because AI can change quickly, Sipahimalani wants that exposure to be easier to adjust. About half now sits in public markets, and he would ideally raise that share to 70% to 75%. Listed holdings give Temasek more flexibility to pivot, he said, while private stakes leave little room to act. Sipahimalanis second concern lies outside AI, in inflation and the rates environment. Bond markets are already feeling that pressure. According to Bloomberg, global bonds have slumped as energy costs and government borrowing drive bets on further rate hikes. Inflation is a risk, together with what is happening in the rates environment, that means there probably is a risk of some breaking point in the equity market at some point, he added He grouped it with AI as the two key risks he sees for 2027. Dalio, Burry, Hayes, and Cramer Have Sounded AI Alarms Other prominent investors have also raised concerns about the AI boom. Bridgewater Associates founder Ray Dalio described AI as a classic bubble nearing its bursting point. He tied the risk to debt-funded spending and rising interest rates. Michael Burry wrote in late September that the AI bubble may burst sooner than he first expected. Arthur Hayes also expects the AI buildout to crash. So far, the stock market has brushed off these warnings. The SP 500 and Nasdaq 100 hit record highs this week on optimism over tech earnings. Rates, however, remain a pressure point. Jim Cramer named the impact of higher interest rates on stocks as his big fear right now. The Mad Money host expects earnings season to show how costlier borrowing is hitting companies.