The article argues the Federal Reserve can deflate the AI boom and inflation, just as rate hikes in 2000 helped burst the internet-stock bubble. The author rejects the view that rates only raise AI firms' borrowing costs, saying short-term rates tighten financial conditions across credit markets and squeeze leveraged investors. The Fed does not aim to end the AI boom, only to bring overall inflation down to 2%, but if that requires draining the liquidity sustaining AI, it has the means and likely the will to do so. The newsletter also notes governments are being flooded with AI-generated requests, and high interest rates have overtaken tariffs as policymakers' top concern.
Summary written by Upside AI from the original article. Read the source for full details.
Read the original on livemint.com ↗
Keywords
Fedinterest ratesartificial intelligenceinflationNVDA
Open a keyword to see other news on the same topic.
Related tickers and likely impact
NVDA
▼ Likely negativeNvidia
Relevance: medium
| Market | US stocks |
|---|---|
| Sector | Information Technology |
| Industry | Semiconductors |
| Market cap | $5.2T |
| Close on 10/19/2026 | 217.09 |
| Change that session | +1.38% |
QQQ
▼ Likely negativeInvesco QQQ Trust
Relevance: medium
| Market | US stocks |
|---|---|
| Sector | ETF |
| Close on 10/19/2026 | 718.36 |
| Change that session | +1.21% |
SPY
▼ Likely negativeSPDR S&P 500 ETF
Relevance: medium
| Market | US stocks |
|---|---|
| Sector | ETF |
| Close on 10/19/2026 | 766.48 |
| Change that session | +0.42% |
Impact is scored by AI from the headline and may be wrong. It is not investment advice.
Related news
- Fed's Williams sees AI supply squeeze lasting beyond 2 years
New York Fed President John Williams said AI equipment supply could take more than two years to catch up with demand, which could add to inflationary pressure. In a Bloomberg interview, he said AI infrastructure buildout is pushing up chip prices and the goods that use them, and that the balance will take longer to reach if demand keeps rising as expected, which he called a big assumption. He reaffirmed that the Fed may need one more rate hike this year, but said 'we'll have to see' about 2027. Williams expects AI investment to stay strong despite higher rates, since investors are relatively price insensitive. For Bitcoin miners moving into AI, the chip and power equipment shortage adds competition, and IREN signed $2.8 billion in new AI cloud contracts in July.
- Global chipmakers sink as inflation data fuels rate-hike fears, AI rout
Global semiconductor stocks fell sharply Thursday after fresh U.S. inflation data stoked fears of further Fed rate increases. In premarket trading SK Hynix slumped 6.7% and Micron 4.1%, Nvidia slid 1.8%, and Intel and AMD each fell more than 3%. In Europe, Infineon and Aixtron each dropped about 8% and ASML fell 5.5%. U.S. consumer prices rose 0.6% in September, lifting annual inflation to 3.7% from 3.4%, above the 3.6% forecast, while core inflation reached 2.6%. Fed funds futures implied roughly a 71% chance the central bank holds rates steady at its Oct. 28 meeting, as crowded bets on AI infrastructure ran into high rates and credit markets wobbled.
- Not going to prejudge: Fed Chair keeps rate outlook open; calls AI positive supply shock
Fed Chair Kevin Warsh declined to signal the central bank's next interest-rate move at the IMF and World Bank annual meetings, saying he would not 'prejudge' policy decisions. He described AI as a 'positive supply shock' for the economy over the medium term and said the US is seeing a massive investment surge, which challenges the theory of secular stagnation. Major brokerages reportedly expect a possible rate hike in December, while markets broadly anticipate no change at the October 27-28 meeting. Warsh said AI is hitting demand before it hits supply, so central bankers and businesses must recognise it as a shock. The Fed will also hold the first field hearing of a task force on November 16.
- Not going to prejudge : Fed Chair keeps rate outlook open ; calls AI positive supply shock
Fed Chair Kevin Warsh declined to signal the central bank's next interest-rate move, saying he would not "prejudge" policy decisions. Speaking in a fireside chat at the 2026 IMF and World Bank Annual Meetings, he described AI as a "positive supply shock" over the medium term, noting that AI is hitting demand before it hits supply and that the US is seeing a massive investment surge. Markets broadly expect the Fed to hold rates at its October 27-28 meeting, while some brokerages see a possible December hike. The Fed will hold the first field hearing of its AI task force on November 16.
- Nasdaq futures dive 1 % as AI rout deepens on debt concerns
Nasdaq futures fell more than 1% on Thursday as a selloff in AI-related stocks deepened on fears that higher rates will make it harder for companies to fund AI investments. The Nasdaq and S&P 500 posted their biggest one-day drop since July on Wednesday after hotter-than-expected inflation data raised expectations of Fed hikes, a selloff that wiped out $80 billion in market value. CoreWeave, a heavily indebted data center operator, fell 15% on Wednesday and was down 4.5% premarket, while Oracle dropped nearly 9% in the prior session and both companies' bonds hit record-high yields. TSMC struck a cautious tone on 2027 despite a sixth consecutive record quarterly profit, citing macroeconomic uncertainty. Traders priced a 27% chance of a Fed hike this month, up from 20% a week earlier, and 67% odds of a December increase.
- What Happens to AI Stocks if the Fed Hikes Rates Again?
The Federal Reserve raised rates in September for the first time since 2023 as inflation stayed elevated, with September CPI up 3.7% year over year. CME Group's FedWatch tool shows a 15% chance of another hike at the October meeting, but an 88% chance of at least one more hike before the end of 2026. The article argues rising rates hit AI stocks in two ways: they reduce the present value of future earnings for fast-growing firms, and they raise borrowing costs for companies using debt to fund AI infrastructure. Nvidia and Alphabet are described as less exposed because they generate large cash flows and need little borrowing, while CoreWeave, which borrows heavily for data centers, is more vulnerable. The author sees one more hike as unlikely to be a crushing blow and says the key is whether credit markets tighten for AI-related borrowing.
Related markets
Latest news
- Irish central bank fines Coinbase Ireland $3.6 million over fund safeguarding failures
Ireland's central bank fined Coinbase Ireland 3.25 million euros ($3.6 million) for alleged failures to safeguard customer funds and oversee outsourced services, saying the unit relied excessively on its U.S. parent and lacked adequate systems and controls. The regulator cited a 2023 episode in which Coinbase directed 30 customers to deposit funds into an alternate account at another U.S. bank when Silvergate neared collapse, holding them alongside funds of another Coinbase entity's customers, and coding errors left a safeguarding account underfunded by an average of 0.54% in 2023 and the first half of 2024. Coinbase said no customer lost money or was unable to access funds. The penalty follows a 21.4 million-euro fine on Coinbase Europe in 2025 for anti-money laundering failures.
- XRP Is 63% Below Its All-Time High and Ethereum 51%. Which Reclaims their ATH First?
XRP trades at $1.33, 63.5% below its all-time high of $3.65 set in July 2025, while Ethereum is at $2,403, 51.4% below its August 2025 peak of $4,946, and both fell over the past month. Reclaiming those highs would require gains of 174.4% for XRP and 105.9% for Ethereum, and the article concludes Ethereum has the edge, citing JPM Coin's integration onto its network on October 19 and a sizeable ETF asset base. XRP ETFs held $1.57 billion in net assets, but inflows slowed to $708,500 on October 21, while Ethereum's cumulative ETF net inflows fell to $12.83 billion amid outflows. Other news includes Germany's Sparkassen savings banks offering XRP trading and Ethereum's Glamsterdam upgrade entering the Hoodi test network on October 26.
- Tech stocks fall as Nvidia boss warns of AI funding slowdown
US stocks fell sharply on Thursday after Nvidia CEO Jensen Huang warned that a “scarcity of capital” was holding back AI rollout, fuelling worries about the cost of sustaining the AI boom. The Nasdaq 100 dropped 1.5% and the S&P fell nearly 1%. Meta shares slid 5% after it raised the lower bound of its capex guidance from $130 billion to $135 billion and issued new non-voting stock, while Tesla fell 2% after cutting its proposed AI spending from $25 billion to $20 billion. Oil added to the sell-off, with Brent rising 2.5% to $111.60 per barrel, its first move above $110 since May, after Aramco evacuated staff from its Dhahran headquarters over a warning of Houthi attacks.
- Musk: People Are "Buying FSD With a Car Attached." There's Only One Problem.
Tesla said 75% of its new North American deliveries in the third quarter came with an FSD subscription, up from 55% in the second quarter, and active FSD subscriptions rose 67% to 1.74 million. Tesla has not disclosed how many subscribers pay, since the first month is free. When an RBC analyst asked whether the paid rate was closer to 30% to 40%, CFO Vaibhav Taneja did not give a clear answer. The article also notes that Tesla's overall gross margin fell from 25.6% in fiscal 2022 to 18% in fiscal 2025, while the stock trades at 185x forward earnings. It argues the paid attach rate is the key figure to watch, as paid FSD revenue remains small relative to Tesla's total sales.
- Producer of 'Say Hi' Shows to Be Listed on HoSE
HoSE has approved the listing of more than 111.4 million DVV shares of DatVietVAC, the producer of the 'Say Hi' shows, with the decision signed on October 20. The first trading day has not been officially announced, but the plan is for early November, with a reference price of 54,800 dong, equal to the IPO price. The market capitalization is estimated at over 6,100 billion dong (more than 234 million USD), compared with nearly 1,700 billion dong for Yeah1 (YEG) at the close on October 22. The IPO's registered purchase orders reached 106.6% of the shares offered. This year, DatVietVAC targets revenue of 3,382 billion dong and after-tax profit of 420 billion dong, growth of about 6% and 11%.
- TeraFab's $16.8 billion bet to start producing 100K chips a month
Host Ejaaz Ahamadeen comments on Elon Musk's proposed $16.8 billion investment in his TeraFab semiconductor manufacturing project. He argues that chips are a key bottleneck for AI, humanoid robots and cars, and that vertical integration would reduce reliance on suppliers such as Nvidia. The first phase involves $16.8 billion to reach 100,000 wafers a month before 2030, with a peak of 1 million wafers a month within 10 years and more than 3,000 jobs. The host also stresses that the project carries many potential risks.
Get the briefing on Telegram or Zalo
Join the Upside Telegram channel or Zalo group for the Vietnam stocks and gold briefing at 8:00 and 19:00 (Vietnam time) on trading days, plus a weekly wrap on Saturday morning.