News about AI investment

Fed Chair Kevin Warsh repeatedly said the Fed had 'removed a dose of accommodation' at its September meeting, a signal that inflation remains a concern. September producer prices rose 6.3% on a headline basis and 5% on a core basis, above expectations, though headline inflation had eased from its 4.2% peak in May. The Fed voted 12-0 on Sept. 16 to raise rates by 25 basis points to 3.75%-4.00%, and the author argues further hikes could come in December and through 2027. Because much AI infrastructure spending is partly debt-financed, the author warns that rising borrowing costs could slow AI growth, noting the market is the second-priciest in history.

Nebius Group (NBIS) shares have fallen about 40% from their record close of $286.69 on June 18 to around $165, mostly in October, with no company news clearly explaining the drop beyond broader selling in AI cloud stocks. Revenue rose to $582 million in the second quarter, up 454% year over year, but management's 2026 forecast of $3.0 billion to $3.4 billion implies about $2 billion in second-half revenue, more than double the first half's $981 million. The company also posted a net loss from continuing operations of around $190 million and capital expenditures of about $5.7 billion in the quarter, while three customers accounted for 59% of second-quarter revenue. Trading at around 15 times expected 2026 sales, the author says the stock is still not cheap enough and would wait for a third-quarter report showing revenue heading toward $1 billion a quarter and backlog growth from customers beyond Microsoft and Meta.

Market presenters on Bloomberg's Opening Trade said US and Asian tech futures rebounded after last week's sharp sell-off, while European futures fell amid protests in France and Russia-Ukraine tensions. Treasuries acted as a haven, while riskier bonds issued by AI companies widened from the rest of the market. India performed well because it has little AI exposure, and investors will watch Meta's guidance on AI spending. French debt sold off, with long-end yields up about four basis points, and the euro came under pressure.

Asian shares fell Monday as worries about AI's enormous funding needs weighed ahead of a busy earnings week, while the euro eased amid political unrest in France. Oil dropped after President Trump's decision to waive some Russia sanctions, though a final decision has not been made, which helped bonds and US stock futures; Brent fell 1.6% to $108.06 a barrel and US crude 0.7% to $100.70. The 10-year Treasury yield fell 3 basis points to 5.0645% after its largest weekly drop in over eight months. Japan's Nikkei dropped 2.0% and South Korea 1.6%, after heavy losses last week, while the PHLX Semiconductor Index shed 11.4%, its longest losing streak since 2008. Major earnings from Meta, Tesla, Lam Research and others are due this week, and five AI hyperscalers are expected to lift capital spending to about $1.2 trillion next year, according to Goldman Sachs; gold rose 0.4% to $4,181 an ounce.

BlackRock is teaming up with Nvidia and other major financiers to build AI infrastructure financing platforms targeting over US$500 billion. The consortium plans to treat high-end AI compute capacity as a distinct asset class for large institutional investors, with BlackRock's credit desks expected to play a central role in structuring the vehicles. The article notes that the move fits BlackRock's existing focus on private markets and higher-fee infrastructure, which saw US$68 billion of private markets fundraising over the 12 months to Q3 2026 and operating margins of 47.8% in the same quarter. It says the key checkpoint for investors is whether AI-linked infrastructure and private credit commitments show up in that fundraising line and help sustain margins.

Amazon is scheduled to report third-quarter earnings on October 29, and the author expects the stock could rally again if cloud momentum continues. AWS revenue rose 37% to $42.2 billion in the second quarter, its fastest growth in 18 quarters, while operating income reached $16.6 billion versus $10.2 billion a year earlier, and its AI business has an annualized run rate above $25 billion. Capital expenditures are expected to reach about $220 billion this year, pushing free cash flow to negative $7.6 billion over the 12 months to June 30, compared with $18.2 billion previously. The author discounts the $53.4 billion non-operating pretax income, mostly tied to the $13 billion Anthropic investment, and says AWS revenue and operating income matter more.

Asian stock markets fell on Monday as worries over the cost and returns of AI investment outweighed stronger-than-expected Chinese data and lower oil prices. Japan's Nikkei dropped 1.2% after losing 5.4% last week, South Korean shares slipped 0.4% after a weekly decline of over 14%, and Taiwan fell 1.4%. China's third-quarter GDP grew 4.5%, slightly above expectations, while the yuan strengthened to 6.6828 per dollar. Brent crude fell 1.7% to $107.95 a barrel after Trump waived certain Russia sanctions, though Iran reported another tanker hitting a mine in the Strait of Hormuz. Gold gained 0.4% to $4,181 an ounce as falling bond yields boosted demand, while Goldman Sachs estimates five major AI hyperscalers could raise combined capital expenditure to about $1.2 trillion next year.

Asian share markets turned cautious on Monday as investors questioned whether AI's enormous funding needs are sustainable, ahead of a busy week of earnings announcements. The euro came under pressure after riots across France, while a drop in oil prices eased pressure on bond markets and US stock futures. The oil price fall followed Donald Trump's decision to waive certain sanctions on Russia, but his later remark that a final decision was still pending left investors uncertain about the direction of US policy.

The article argues that the Magnificent Seven together account for more than one-third of the S&P 500's market capitalization, and the author would choose Alphabet as the single stock to own for the next decade. According to the piece, YouTube held a 14.2% share of U.S. daily TV viewing time in July per Nielsen, Waymo was completing 500,000 rides a week, and Google Search made up 53% of Alphabet's revenue. Google Cloud posted second-quarter revenue of $24.8 billion, up 82% year over year. However, Alphabet expects to spend about $200 billion on infrastructure at the midpoint of its plan, free cash flow turned negative in Q2, and the author says investors must be very patient.

The article estimates what a $10,000 investment in Nvidia, now worth nearly $179,000 after four years of AI-driven gains, could be worth by 2030. Nvidia's revenue in the first six months of fiscal 2027 rose 96% to $177.8 billion, and analysts expect fiscal 2027 revenue of $411.6 billion, with EPS nearly doubling to $9.31. The author cites Jensen Huang's view that chip sales will double in 2027 and a $3 trillion to $4 trillion AI infrastructure opportunity by 2030. Assuming revenue reaches $1.09 trillion in 2030 and the stock trades at half its current 18 times sales, the market cap could reach $9.8 trillion, implying 88% upside and a $10,000 stake worth more than $18,800. The article calls this a conservative estimate.

The author argues that last week's sell-off, especially Friday's, does not mean the data center and AI 'super-cycle' is over. He suggests the selling may instead reflect unwinding positions and the collapse of a hedge fund that borrowed billions from a firm that has not yet disclosed its losses. He notes that semiconductors fell nine straight days and CoreWeave's corporate bond yields spiked, arguing the bond market is squeezing debt-funded buyers. He defends Nvidia and CEO Jensen Huang, saying Nvidia's funding of AI companies differs from the circa-2000 'vendor finance' that benefited vendors whose customers did not need their products. He believes AI demand is real, citing OpenAI, Anthropic and Google's Gemini, which have monetized AI at scale.

AI stocks have had a rough time as investors question whether heavy data center spending will pay off, but Microsoft is bucking the trend, with shares up around 8% over the past month. Azure cloud revenue topped $100 billion for the first time, up 41% from a year earlier, and management expects Azure revenue to rise 45% in fiscal 2027, showing that Microsoft's roughly $175 billion in capital spending this year is paying off. The new Copilot desktop app, which helps users code and completes some tasks autonomously, had 30 million paid subscribers before its launch, a 50% jump in just a few months. The article also argues that the company's enterprise strength and AI focus position it well for the long term, and notes its trailing P/E of 27 is below the tech sector average of 33.

In August, Nvidia brought together Apollo, BlackRock, Blackstone, Brookfield, Goldman Sachs and KKR to set up financing platforms that could mobilize over $500 billion for AI infrastructure. The article argues that access to cheap, large-scale capital will increasingly decide who can compete in AI, giving the United States an edge through its deep capital markets. The five largest US hyperscalers are on track to spend $730 billion on capital expenditure in 2026, with up to a third expected to be financed by debt. Nvidia's model aims to turn compute into an asset that pension funds and insurers can own, though the article flags risks such as short-lived GPUs and unpredictable AI demand. It also contrasts Europe's large household savings, which are not yet well channeled into startups, with China, where as much as 80% of newly built computing capacity reportedly sits unused.

The data center buildout totals $10.3 trillion, surpassing the railroad, electrification and dot-com booms, according to a report by Columbia Business School professor Stijn Van Nieuwerburgh. He estimates its economic impact at nearly 4% of GDP, almost twice that of 19th-century railroads. Data center construction value has more than doubled to $85 billion a year, while other construction fell 8%, including a $29 billion drop in new houses and apartments. States such as Nevada are trimming tax breaks, and economist Paul Krugman argues the spending will reduce labor demand in the long run.

Asia's AI trade is under pressure as a selloff in US tech stocks raises worries that higher financing costs could slow the data center spending that supports regional chipmakers and suppliers. Oil's surge to US$110 a barrel has added inflation concerns, while US chip shares had their longest rout since 2008. A Goldman Sachs basket of Asian AI hardware stocks fell 11 percent last week, with Samsung Electro-Mechanics down 23 percent and Unimicron off 14 percent. CoreWeave's shares dropped 25 percent in a week as its bonds signaled distress, and Gartner warned that more than US$3.5 trillion of AI infrastructure spending could be impaired by 2030. Still, there is little sign so far that orders have weakened.

Investment in data centers, put at $10.3 trillion, is now the largest financial bet in US history, surpassing the late 1800s railroad boom in both scale and economic impact. A Columbia Business School report estimates the buildout's economic effect at nearly 4% of GDP, compared with more than 2% for railroads, which cost about $173 billion in today's dollars. Texas, Virginia, Ohio and Georgia lead projected spending, and some states are rethinking tax breaks as revenues shrink and energy demand rises. Data center construction value has more than doubled to $85 billion a year while other construction fell 8%, and economist Paul Krugman warns this crowds out housing and jobs. The article also notes that AI profitability has yet to catch up with the spending.

Trillions in borrowed money have fueled the AI boom, but investors are growing uneasy about whether more can be raised and repaid. CoreWeave, which has accrued $72 billion in liabilities to run 51 data centers, saw its bond prices crash, with investors pricing a more than 60% chance it would fail to meet its obligations. Oracle bonds also sold off, though less steeply, and the cost of insuring SoftBank's debt against default climbed. Barclays says the spread on risky AI debt rose more than 50% over six months. CoreWeave's model of leasing space for 15 years or more and subleasing it to shorter-term customers such as Meta, Microsoft and OpenAI has drawn WeWork comparisons, which the company disputes.

Wall Street's AI rally faces a test as investors await earnings from Meta, Tesla, chipmakers Lam Research and Texas Instruments, and SpaceX. Recent declines in AI, chip and hardware stocks such as Dell Technologies have raised doubts about whether the rally can continue. LSEG IBES data show S&P 500 earnings are expected to rise more than 30% in the third quarter, but investors want proof that heavy AI spending will pay off. Goldman Sachs expects five hyperscalers to lift combined capital spending to around $1.2 trillion next year. The S&P 500 posted its biggest weekly fall since June but remained only about 2% below its record high.

Data centre projects in America's $10 trillion AI infrastructure boom are facing delays, cancellations, blocks and weaker investor confidence. RegLayer counted at least 47 large projects delayed, withdrawn or blocked in 2026, while Bernstein estimated only about 35% of the planned US pipeline is credible. More than 1,000 communities have tried to introduce temporary bans or restrictions on AI infrastructure in 2026, and rising borrowing costs threaten financing for neocloud firms. CoreWeave's stock lost almost 25% in a week, and several IPOs, including SoftBank's SB Energy and Nvidia-backed Firmus, were delayed or shelved. Construction delays could let customers cancel: Cipher agreed to cover the first $359 million of cost overruns on a Texas project tied to Anthropic, and Anthropic could cancel its $45 billion Nscale agreement if targets are missed.

Wall Street has spent recent years rewarding nearly every company tied to AI, including hyperscalers, chipmakers, memory providers, cloud firms and equipment makers. A Columbia University estimate puts cumulative AI infrastructure investment and spending at about $9 trillion over 2025–2032, and says the sector would need more than $3.5 trillion in annual revenue by 2032 just to break even. The article argues that, as with the late-1990s telecom fiber build-out and 19th-century railroads, the biggest winners may be the businesses that use the infrastructure rather than those that build it, since builders often face overcapacity and weak returns. It points to industrial companies using AI for tasks such as predictive maintenance and logistics as potential beneficiaries, and presents the Industrial Select Sector SPDR ETF (XLI) as a complementary holding with a small allocation.

ASML reported record third-quarter results on Oct. 14, with revenue of €11.7 billion, up 56% year over year, a gross margin of 57.5%, and earnings per share up 136% to €12.95, and it raised its full-year guidance. The company expects €14.7 billion in revenue for the current quarter at the midpoint of its range. CEO Christophe Fouquet said customers don't expect supply to catch up with demand until at least 2028, while ASML aims to raise supply by 30% in both 2027 and 2028. The article argues that concerns about AI infrastructure spending may be overblown and, assuming 45% annual earnings growth, suggests the stock could rise about 72%, though it trades at 29 times forward earnings.

A heavy earnings week begins with Meta Platforms, Tesla, Netflix and Texas Instruments set to report, alongside Wednesday's crude oil inventory data. Pressure on semiconductor stocks and doubts about AI spending remain the main focus for markets.

Nvidia shares have gained 899% over the past five years (as of Oct. 15), and November has been mostly positive this decade, with the only decline coming in November 2025, when the stock fell 13%. Data center revenue rose 117% year over year to $89 billion in fiscal Q2 2027, with hyperscalers contributing about $49 billion. The article argues the key risk to this pattern is hyperscaler capital spending, which depends on the momentum of their cloud businesses. Hyperscaler backlogs have exceeded $2 trillion, and four of the top five will report third-quarter results within two weeks. If cloud growth slows, hyperscalers may cut capex, which would weigh on Nvidia's data center business.

US tech stocks fell sharply last week, with the Nasdaq 100 down 5.5%, the S&P 500 down 2% and the Philadelphia Semiconductor Index down 11.4%. Broadcom CEO Hock Tan compared speculative AI investing to casino gambling, while the article flags worries over heavy capital spending and rising debt, such as CoreWeave's roughly $50 billion in borrowings. US inflation reached 3.7% in September and Brent crude hit $112 a barrel, leaving the Federal Reserve less room to maneuver. Still, 70% of S&P 500 stocks rose on the week as money rotated into energy, utilities and consumer staples. Global tech equity funds saw $4.75 billion in outflows, emerging-market equity funds drew $717 million, and the PSEi rose 2.1% to 5,782.70.

J.P. Morgan analyst Doug Anmuth raised his price target for Alphabet stock to $425, about 23% above the current price, betting that selling its custom TPU AI processors to other companies will accelerate cloud revenue. Google Cloud sales rose 82% to $24.8 billion in the second quarter of 2026, and Anmuth thinks cloud revenue could double in the third quarter. Piper Sandler's Thomas Champion estimates Google's processor sales could reach $104 billion by 2028, compared with Alphabet's total second-quarter revenue of $120 billion. Alphabet reported Q2 EPS of $9.11, up 294%, but some investors worry about its roughly $200 billion AI infrastructure spending this year. The stock trades at a trailing P/E of about 17, versus a tech sector average of 33.

Technology stocks fell this week as financing concerns mounted, pulling the S&P 500 and Nasdaq into negative territory. CoreWeave (CRWV) and Nebius (NBIS) each closed the week down more than 25%, and Baird's Ted Mortonson placed Oracle (ORCL) near the bottom of tech on free cash flow, citing a higher cost of capital and scrutiny of circular finance. Nvidia CEO Jensen Huang voiced optimism about CoreWeave, in which Nvidia holds roughly a 10% stake. Patrick Moorhead (Moor Insights & Strategy) called the sell-off another scare, while Dan Ives (Wedbush Securities) pointed to CoreWeave's revenue backlog of roughly $104 billion at the end of the second quarter. UBS described the volatility as a recalibration of expectations rather than a fundamental break, urging investors to watch whether AI spending turns into sustainable earnings growth.

Third-quarter earnings season is entering its busiest stretch, with Capital One reporting Tuesday night and Meta after Wednesday's close. After last week's bank earnings were met with selling even when profits beat expectations, the backdrop remains tough: rising bond yields, two September inflation reports hotter than expected, Middle East tensions, and doubts about the durability of AI spending. According to LSEG, Capital One is expected to earn $5.50 per share on $16.26 billion in revenue, with focus on net interest margin, charge-offs, expenses and the Discover acquisition; its shares trade below 9 times forward earnings. Meta is expected to report EPS of $5.94 on $63.32 billion in revenue, and investors will watch how management justifies large AI infrastructure spending alongside its Muse AI assistant.

TSMC plans to spend $60 billion to $64 billion this year on factories and equipment, about a third of trailing-12-month revenue, which the article presents as a sign of coming growth. CFO Wendell Huang linked the spending to long-term customer demand, including agentic AI, and said spending from 2026 through 2028 should be significantly higher than in the previous three years. Third-quarter revenue reached a record $46.7 billion, up 41% year over year, with fourth-quarter guidance of $52.3 billion to $54.3 billion, and profit margin rose to 51.1% from 45.7%. The article notes geopolitical risks in Asia and says overseas plants such as Arizona cost more to run and may weigh on future margins. The stock trades at 19 times 2027 earnings estimates, with consensus calling for 28% earnings growth next year.

Amazon (AMZN) shares were flat over the six months to October 15, while the company ramps up AI infrastructure spending to about $220 billion in 2026, up from roughly $200 billion, partly due to higher memory costs. Amazon Supply Chain Services, launched in May, lets outside companies use its freight, distribution, fulfillment and parcel delivery network, with Procter & Gamble, 3M, Lands' End and American Eagle among its first customers; its Trainium and Graviton chips could also reach customers beyond AWS. Management expects servers to break even in just under three years and remain useful for five to six years, but returns depend on utilization, customer pricing and how quickly newer chips make existing equipment less competitive. Amazon trades at about 20x trailing earnings and 24x expected earnings, well below its historical valuation.

Oracle shares have fallen 53.84% over the past year, yet 80% of covering analysts still rate the stock a buy, with a median target 78.48% above the current price, according to CNN. The article notes revenue grew almost a third in the latest quarter and earnings grew faster, though that does not explain the drop. Analysts are weighing contracts to supply computing capacity worth $638 billion, far above annual revenue, while the market is focused on cash flow: capital spending of $75.66 billion over the past year exceeded $46.94 billion of operating cash, a gap funded by borrowing. The article frames the core question as whether returns on this spending arrive before the debt becomes a problem. The shares trade at 17.76 times expected next-year earnings.

Global hedge funds suffered steep losses last week as a sharp unwind of AI bets hit, with Asia-focused funds hardest hit. Goldman Sachs said global fundamental long-short funds, or stock pickers, lost money every day last week, losing 2.9% for the week to October 15, though they remain up 14.3% year to date. South Korea's semiconductor-heavy market bore the brunt, as the Kospi tumbled 8% on Thursday to a six-month low, while CoreWeave's bonds sold off, pushing yields above 15%. Analysts said the selloff reflected a crowded trade meeting hotter-than-expected US inflation data, which revived expectations of rate hikes, rather than a fundamental rejection of AI. Goldman also noted that Asia-focused stock pickers have erased more than half of their gains since their late-June peak.

Sandisk shares have surged 827% over the past year but dropped 44% from their June 22 52-week high, with fears over NAND flash demand, AI infrastructure spending and competition from China's CXMT. The author argues these fears are overblown, since CXMT doesn't make NAND flash and its DRAM technology reportedly trails Micron and SK Hynix. Enterprise SSD demand is booming on the back of the AI boom, with contract prices reportedly up 3x year over year, and McKinsey and IDC forecast annual growth of 35% and over 40% through 2030, respectively. Sandisk posted $20 billion in fiscal 2026 revenue with an 11% NAND market share, and its TAM is seen reaching $500 billion next year. The company targets mid-to-high teens annual revenue growth in fiscal 2028 to 2030 and a non-GAAP operating margin of 75% by fiscal 2030, versus 63% in fiscal 2026.

Many AI-leading stocks are pulling back after three years of strong gains, as investors worry about rising data-center funding costs and weaker-than-expected future demand. The iShares Semiconductor ETF is down more than 20% from its June peak and is in bear territory, weighing on the Nasdaq-100 and S&P 500. The author highlights two non-semiconductor AI stocks: Datadog (DDOG), whose revenue growth accelerated to 36% in Q2 and whose 2026 revenue forecast was raised by $140 million to $4.46 billion, though its P/S of 24.3 is well above its three-year average of 17.7. Palo Alto Networks (PANW) reported next-generation security ARR of $9 billion, up 63%, and targets $20 billion by fiscal 2030.

CoreWeave (CRWV) shares fell sharply this week, pushing its six-month decline to 46%, as two factors collided: its corporate bonds across maturities were sold off on fears of an AI slowdown and concern over its precarious balance sheet. A Gartner report forecasting that over 80% of neocloud providers will cease independent operations by 2030 added to the pressure. CoreWeave said it is confident in its funding, and several Wall Street firms defended it, including BofA's Tal Liani, who called the move sentiment-driven rather than about the company's ability to pay its debt and maintained a $140 price target. Liani expects fundamentals such as revenue growth to matter once the period of concern passes.

Investor confidence in AI leaders weakened this week, with Nvidia losing over $350bn in market value and the Nasdaq 100 down 5.5%, making Meta's results after Wednesday's close a key test before Alphabet, Microsoft and Amazon report. Analysts expect Meta's third-quarter revenue above $63bn, but adjusted operating income of $18.8bn is seen lower than in the previous quarter and a year earlier, with margins a little under 30% as AI costs rise. In the eurozone, growth has beaten expectations despite high energy costs, but 3.8% inflation makes an October ECB rate rise more likely, while PMI readings are expected to ease slightly to 52.5. In the UK, annual inflation is forecast to rise to 3.4% in September from 3.1% in August, above the Bank of England's forecast and adding pressure for a November rate rise.