Higher rates will separate the winners and losers in the AI trade: T. Rowe Price

• The market has been concerned about a hawkish Fed, but a prolonged elevation of rates is the primary concern for the next couple of years.
• AI data centers and the semiconductor supply chain (picks and shovels) have strong, profitable returns, which the market may have underestimated.
• Software companies demonstrating an inflection in revenue growth rates are proving resilient, suggesting that the 'doomsday scenario' for SaaS was overdone.

Rahul Ghosh of T. Rowe Price discusses the market's reaction to inflation and interest rates, distinguishing between a hawkish Fed and prolonged high rates. He highlights the attractive investment potential of AI data centers and semiconductors, suggesting that markets may have underestimated returns in this sector. He also notes that certain software names are showing resilient revenue growth, indicating that previous bearish sentiment was overdone.