AI Obscuring Other Tech Advances, Franklin Templeton CEO Johnson Warns
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Key Takeaways
- Jenny Johnson, Chief Executive Officer of Franklin Templeton, said in October at the Milken Institute Asia Summit that artificial intelligence is likely masking so many other technological advances.
- Microsoft, Amazon, Alphabet, Meta Platforms, Oracle and CoreWeave are planning combined capital expenditure of approximately $785 billion in 2026, and Johnson expects the figure to exceed $1 trillion for 2027.
- US productivity growth stands at around 2 percent, with Johnson attributing much of this growth to older technologies rather than artificial intelligence.
- Johnson recommends two-year bonds from hyperscalers instead of AI infrastructure stocks, which offer a pretty good yield and provide a better risk-to-return ratio than long-term commitments.
- Financing for AI infrastructure has increasingly shifted from equity to debt, with hyperscalers increasingly using off-balance-sheet instruments and vendor financing to keep pace with rising operational requirements.
Jenny Johnson, Chief Executive Officer of Franklin Templeton, warns that an obsession with artificial intelligence is crowding out other important technological developments. The CEO of the asset manager, which managed around $1.83 trillion as of August 2026, said in October at the Milken Institute Asia Summit in Singapore that AI "is likely masking so many other technological advances".
Productivity Gains Remain Elusive
While major technology companies invest hundreds of billions of dollars in AI infrastructure, expected productivity improvements are falling short. The US productivity growth rate stands at around 2 percent. Johnson attributes much of this growth to older technologies, not artificial intelligence.
Microsoft, Amazon, Alphabet, Meta Platforms, Oracle and CoreWeave are planning combined capital expenditure of approximately $785 billion in 2026. For 2027, Johnson expects the figure to exceed $1 trillion. These expenditures have not slowed down, she explained. However, the productivity boost these investments promise is barely visible in the data.
Actual productivity gains from AI will only come once companies have moved beyond the infrastructure build-out phase and use the technology to generate new revenue and efficiency improvements, according to the Franklin Templeton CEO's assessment.
Short-Term Bonds Instead of AI Stocks
Rather than investing directly in AI infrastructure stocks, Johnson recommends a different strategy: short-maturity bonds from hyperscalers, those cloud operators that maintain large data center networks. The strong cash flows and solid balance sheets of these companies support this thesis. Two-year bonds offer a "pretty good" yield, Johnson said in a CNBC interview.
Short-maturity bonds provide a better risk-to-return ratio than long-term commitments, argues the asset manager. Technology is evolving so quickly that a ten-year bet carries genuine uncertainty.
Franklin Templeton estimates that hyperscalers issued more than $500 billion in bonds in 2026 to finance their operations. Financing for AI infrastructure has increasingly shifted from equity to debt. Hyperscalers are increasingly using off-balance-sheet instruments and vendor financing to keep pace with rising operational requirements. The growing complexity of fundraising deserves attention, Johnson warned.
Franklin Templeton as Technology Investor
Franklin Templeton positions itself as an early investor in emerging technologies beyond artificial intelligence. The company launched the OnChain U.S. Government Money Fund in 2021, the first US-registered fund to record share ownership on a public blockchain.
Already in January 2026, Johnson said in Davos that companies that execute properly will "take off and leave others behind". This statement signals an expected divergence between firms that successfully adapt to new technologies and those that fall behind.
Impact on Interest Rates and Inflation
Franklin Templeton's investment strategy is based on the assumption that borrowing for artificial intelligence will keep interest rates and inflation elevated. If interest rates instead fall sharply, investors who bet on short-maturity bonds would face lower yields upon reinvestment.
Johnson has developed her argument throughout 2026, from her remarks in Davos in January to her appearances in October. The focus consistently remains on the financing needs and productivity reality of AI implementation.