The AI Rally's Weak Spot: Oracle's Warning Sign

📊 The Art of Investing Survey – Fill in the form here, we’d love your feedback: https://forms.office.com/e/tCyxzN48Ks📈 Download the full Portfolio Performance Slides View the portfolio breakdown: here📧 Get in touch: [email protected]📱 Behind the scenes: @_theartofinvesting on TikTok🎧 Listen on: Apple, Spotify, YouTube Overview:This week on The Art of Investing, the team unpack a market where volatility is building beneath the surface, with credit markets, AI spending, and rising oil prices all contributing to a more fragile backdrop.While headline equity performance remains relatively steady, attention is turning to credit default swaps (CDS) as a key signal of risk, particularly in companies heavily exposed to the AI boom.From Oracle’s growing debt pile to increasing competition across AI models, this episode explores whether the market may be overestimating the returns from AI investment, and what that could mean for both equities and credit markets.Alongside this, the team break down another week of portfolio performance and the broader macro picture, including rising bond yields, commodity strength, and continued sector rotation.This Week’s Highlights:📈 Portfolio Edges Higher A steady week sees the portfolio rise +0.4%, continuing its strong long-term performance.⚒️ Commodities Continue to Lead Copper and mining equities outperform, supported by supply constraints and ongoing demand linked to AI infrastructure.🛢️ Oil Prices Push Higher Brent crude continues its upward move, adding pressure to global markets and import-heavy economies.💳 CDS Back in Focus Credit default swaps re-emerge as a key market signal, highlighting growing concerns around corporate debt levels.🤖 AI Trade Under Pressure Rising costs and increasing competition begin to challenge the assumption of dominant, high-margin AI winners.📉 Rotation Away from Tech Semiconductor and AI-linked stocks face renewed pressure as capital rotates elsewhere.Portfolio Snapshot – Week 49:No changes were made to the portfolio this week.📊 Weekly portfolio performance: +0.4%📈 Total return since inception: +23.1%📅 2026 year-to-date return: +10.5%Top Performers:📈 BlackRock World Mining Trust PLC: +3.3% WoW📈 WisdomTree Copper ETF: +3.1% WoW📈 Vanguard FTSE 250: +2.3% WoWUnderperformers:📉 iShares Nikkei 225 ETF: -2.7% WoW📉 iShares MSCI India ETF: -1.2% WoW📉 XLI SPDR US Industrials ETF: -0.5% WoWBig Questions This Week:• Are credit markets signalling deeper risks beneath the surface of equity markets? • Can AI investment deliver the returns needed to justify rising debt levels? • Is the shift from “winner takes all” to a more competitive AI landscape underway? • How are rising oil prices and bond yields impacting global growth expectations? • What does increasing volatility mean for portfolio positioning going forward?What You’ll Learn:✔️ What credit default swaps (CDS) reveal about market risk✔️ Why AI competition could reduce pricing power and returns✔️ How rising debt levels are impacting key AI-linked companies✔️ What higher oil prices and bond yields mean for investors✔️ How the team are navigating volatility within the portfolioDisclaimer:This podcast is provided for educational and informational purposes only. The content presented is not intended as personal investment advice or a recommendation to buy, sell, or hold any particular securities or investments. All discussions regarding the model portfolio are illustrative and for educational purposes.Your capital is at risk. The value of shares, ETFs and ETCs can fall as well as rise, which could mean getting back less than you originally put in.