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Rohit Sipahimalani points to tighter safety regulation and weak customer returns as possible triggers, while favoring more publicly traded AI investments.
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Temasek would prefer to hold 70%–75% of its AI investments in publicly traded assets, up from about half today, so it can adjust its exposure more readily as the sector changes. CIO Rohit Sipahimalani said a reversal is not imminent, though market turbulence in 2027 is possible. He sees tighter safety regulation or weak returns for AI customers as potential triggers; meanwhile, AI-linked earnings are supporting U.S. stocks even as gains remain narrow.
Temasek’s target of 70%–75% applies to its AI exposure, not to the firm’s overall portfolio.
Its private AI holdings include model developers OpenAI and Anthropic, which are harder to exit quickly than public investments.
About half of Russell 3000 stocks were at least 20% below their June highs, despite U.S. indexes near records.
Temasek’s chief investment officer, Rohit Sipahimalani, has identified a reversal in AI-linked investments as the biggest risk facing markets. Speaking at the Milken Institute Asia Summit in Singapore, he paired that warning with continued confidence in AI’s long-term prospects and a preference for holding more of Temasek’s AI exposure in publicly traded assets, CNBC reported.
His warning was not a prediction of an immediate downturn. Temasek does not see an unwinding of the AI trade as imminent, he said, although market turbulence in 2027 is possible. The concern sits alongside the firm’s continued investment in the sector.
Sipahimalani credited AI and strong earnings among companies tied to the technology with keeping U.S. stocks near record highs despite rising Treasury yields. In his assessment, that earnings momentum has helped the S&P 500 withstand higher borrowing costs—a source of market strength that also makes the AI trade consequential beyond individual technology companies.
He pointed to a much weaker picture beneath the headline indexes: roughly half of Russell 3000 stocks were at least 20% below their June highs. That contrast, he said, highlights how much the market’s resilience has depended on a small group of winners rather than strength across stocks.
Sipahimalani identified two ways confidence in the AI trade could weaken. One concerns the rules governing the technology; the other concerns whether buying and using AI produces sufficient returns for customers. He presented both as potential triggers, not developments already causing a reversal.
One of the things we recognize is that AI is such a fast-changing environment that things could change quite easily, and you have to be able to pivot.
Rohit Sipahimalani, Temasek chief investment officer, at the Milken Institute Asia Summit
About half of Temasek’s AI exposure is currently in publicly traded assets. Sipahimalani said the firm would ideally raise that share to around 70%–75%. Those figures describe the composition of its AI investments, not AI’s share of Temasek’s entire portfolio. The higher range is a preference, rather than an allocation already reached.
Public holdings would give Temasek greater ability to adjust its investments as the industry evolves, compared with private assets that can be harder to exit quickly. The distinction is about flexibility: Temasek remains bullish on AI over the longer term and has continued increasing its investments in the sector.
Its private AI investments include model developers OpenAI and Anthropic, Sipahimalani said. He distinguished the size of those exposures from investments in other areas where Temasek has more flexibility, placing those existing holdings within the same discussion of how the firm manages its AI exposure.
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