US Inflation and AI Exuberance Cloud Private Capital Prospects

The US Federal Reserve's inflation target of 2% remains elusive as annualized July CPI print fell only slightly to 3.4%, tempering expectations of rate hikes.

This hasn't deterred corporate M&A activity, with high-profile deals including Josh Kushner and Bob Iger's $12.5 billion takeover of the LA Lakers and Goldman Sachs' $2.25 billion play for NEOS Investments.

However, Continental Drift cautions that private capital may be overextending itself in pursuit of scale, particularly given ongoing inflation concerns and potential for irrational exuberance in AI investments.

NVIDIA's unveiling of strategic partnerships to put $500 billion to work across AI infrastructure build out is one such example, raising concerns about ROI on large language models (LLMs) and the risk of overvaluation.