TLDR: HSBC’s Chief Investment Officer for the Americas, Jose Rasco, asserts that Artificial Intelligence’s influence extends far beyond the semiconductor industry, driving a significant recalibration across the broader equity market. He emphasizes a necessary shift in focus from the ‘Magnificent 7’ tech giants to a wider array of companies poised to benefit from generative AI adoption, anticipating a slowdown in top tech earnings and a broader market rally.
In a recent discussion on CNBC’s ‘Closing Bell Overtime’ on September 26, 2025, Jose Rasco, Chief Investment Officer of Americas at HSBC, articulated a nuanced perspective on the burgeoning impact of Artificial Intelligence (AI) on global markets. Rasco contended that the true transformative power of AI transcends the initial ‘AI input trade’ primarily associated with chip manufacturers, signaling a fundamental recalibration of the broader equity landscape.
Rasco observed that the current bull market, which has seen significant gains from early April, has been predominantly ‘led by growth… led by the MAG7 [Magnificent 7]… and led by tech.’ However, he stressed the imperative for this market leadership to ‘broaden out.’ According to Rasco, the investment community needs to redirect its attention towards the ‘forgotten 493’ companies, which are strategically positioned to reap substantial benefits from the widespread adoption of generative AI.
Forecasting a shift in earnings momentum, Rasco highlighted that the ‘MAG 7’ are expected to experience a slowdown in earnings growth, projecting a decline from 23% to 15% starting in the third quarter and extending through the end of the fourth quarter of next year. This anticipated deceleration underscores the need for a diversified investment approach that acknowledges AI’s pervasive influence across various sectors.
Delving into the future trajectory of AI, Rasco elaborated on its next evolutionary phase. He envisions AI’s impact manifesting through ‘working with industry… doing joint ventures with clients… and helping them become more productive.’ This broader application, he argued, is ‘really the future of this trade from our perspective. It’s not just an AI input trade. It’s more about the broader tech sector. and what is going on in the broader economy. and how does this create a broader market rally.’
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The discussion also touched upon recent market movements, including the performance of companies like Oracle and Okta, which have shown weaknesses amidst the AI narrative. Despite significant investments, such as Nvidia’s potential $100 billion into OpenAI, Rasco raised questions about whether ‘so much of that [promise of the future] priced into’ current market valuations, suggesting a potential for further adjustments as the market digests AI’s long-term, broader implications.
