AI Stock Pullback Could Lower Small-Cap Borrowing Costs, Macro Chief Says

Janus Henderson macro chief Richard Bernstein noted that an ongoing decline in artificial intelligence shares could reduce financing costs for smaller companies if market valuations adjust. Semiconductor equities recently experienced an eight-day losing streak, their longest continuous decline in 16 years, while a major chip exchange-traded fund closed nearly 14% below its October peak. At the same time, the median stock in the S&P 500 index sits 16% below its highest point, and small-cap equities ended lower for the week despite short-term gains.

The potential shift comes amidst elevated inflation across consumer, producer, and import prices, with core import prices climbing faster than core consumer prices. The Federal Reserve raised interest rates by a quarter point on September 16, 2026, marking its first rate hike since 2023. Persistent price pressures challenge expectations that the central bank will limit its policy tightening to a single interest rate increase.

Looking ahead, market trends suggest leadership could move away from artificial intelligence and technology stocks over the long term. Investors will be watching whether valuation adjustments lower borrowing expenses for small-cap equities and foster broader participation across other market sectors.