'AI isn’t a bubble, power is the bottleneck': BlackRock’s Ben Powell

Ben Powell, Chief Middle East and APAC Investment Strategist at the BlackRock Investment Institute, outlined why the next decade of market returns will depend not only on technology companies but also on the infrastructure, power systems, and mid-cap engines enabling this global transformation. India, he said, sits quietly yet centrally in many of these shifts.

According to Powell, “While India may not pioneer foundational AI breakthroughs, it stands to benefit immensely from AI-driven productivity adoption across IT services, manufacturing, and financial infrastructure. For global portfolios heavily tilted toward AI-heavy regions such as Korea, Taiwan, and the U.S., India offers valuable diversification. Structural reforms, demographic strength, and improving regulatory clarity all reinforce India’s position as a compelling long-term allocation.”

At a recent media roundtable, Powell described the ongoing AI wave not as a hype-led rally but as a structural economic redesign. What concerns him most is not valuations or competition among model builders but something far more fundamental: electricity. The world, he explained, simply does not have enough power infrastructure to support the exponential growth in AI compute needs. “The silicon brain needs energy just the way humans need calories to think,” he said.

This constraint, he believes, is emerging as one of the biggest investment opportunities of our time. From nuclear plants to copper wiring to grid expansion, the global power system will require multi-trillion-dollar capital deployments to keep pace. This is precisely why Powell rejects the idea that AI is a bubble. The listed companies driving the AI boom today generate real revenue, earnings, and cash flow. BlackRock expects U.S. equities to deliver over 15% annual earnings growth for each of the next five years, a rare and striking forecast entirely powered by AI-led productivity gains. The only risks to this bullish view, Powell said, would be if valuations begin to far outpace earnings or if AI adoption slows meaningfully.

He also addressed concerns around Japan’s yield normalization and its potential global ripple effects. Powell expressed confidence that the Bank of Japan understands the delicate balance required for a highly indebted economy and will let yields rise gradually. BlackRock remains underweight Japanese government bonds, expecting yields to drift higher, but sees no signs of an abrupt or destabilising move.

Building on this global view, Rishi Kohli, Chief Investment Officer (CIO) of JioBlackRock, offered an equally assertive domestic perspective focused on the transformation within India’s equity markets. He highlighted a dramatic and often underappreciated deepening of India’s market-cap structure. A decade ago, a company with a ₹20,000–25,000 crore market cap would have been considered a large mid-cap. Today, that same company sits at the bottom of the small-cap category. Meanwhile, the number of listed firms above ₹5,000 crore in market cap has surged from 159 to 618. This shift, Rishi said, has created an unprecedented pool of high-quality, scalable businesses for active managers.

Many of these so-called “small caps” are, in reality, market leaders with strong balance sheets and the potential to double earnings in the next three to four years. Even for investors who missed their early growth phase, the journey from ₹15,000 crore to ₹80,000 crore still offers a 5–7x wealth-creation opportunity. But he cautioned that part of the recent rally has come from valuation expansion, not just earnings.

On the rupee’s depreciation past 88–89 per dollar, Rishi said the move was neither surprising nor harmful. After two years of RBI intervention, market forces eventually take over. With export pressure rising, a slightly weaker rupee even provided some relief. He expects the currency to stabilise around current levels, especially if equity flows pick up.

Rishi also noted that foreign investor flows into India have become momentum-driven rather than structural. India remains significantly under-owned; there is a 3.5 percentage-point gap between its MSCI EM index weight and actual FPI allocation—the widest ever recorded. Seasonality also matters: November–December is typically strong, while January–February tends to be volatile. But once earnings stabilise and global uncertainty around U.S. tariffs clears, he anticipates a broad-based market rally after March.

Powell and Rishi converged on the same conclusion: the next decade will reward investors who look beyond superficial narratives and focus instead on structural constraints and long-term capacity building. Whether it is America’s electricity shortages or India’s expanding universe of high-quality mid-caps, the opportunities are massive but highly selective. As Powell put it, “General excitement about AI isn’t enough. The winners will be those who know exactly where to build capital.”