JPMorgan Asset Management is maintaining a positive outlook for the high-grade corporate bond rally, but Portfolio Manager Stephanie Doyle has identified two primary risks threatening its continuation: excessive technology spending related to artificial intelligence and potential weakness in retail investor demand. Doyle is closely monitoring 2027 capital expenditure plans from tech firms, noting that a continued rapid increase in spending, similar to that seen between 2025 and 2026, could signal trouble for the market.

Technology companies have already raised over $300 billion from US investors specifically for AI buildout, which is projected to cost as much as $5 trillion by 2030. Doyle views the sector favorably because she anticipates this massive investment will eventually materialize into revenue, making their debt attractive. She also observes discipline among issuers, evidenced by some companies opting to raise equity rather than solely relying on debt to maintain strong credit ratings.

The rally's stability also depends on sustained retail participation. Doyle stated that if total returns on investment-grade bonds turn negative due to rising Treasury yields, individual investors—who provide crucial support keeping credit spreads tight—tend to pull back. Despite these concerns, Doyle believes spreads could easily return to their tightest levels of the year, noting they are currently only 5 to 7 basis points away from those lows, supported by steady growth and strong earnings.

Stephanie Doyle anticipates high-grade spreads will tighten further, potentially reaching levels not seen since 1998.