US EditionStocks whipsaw as AI bubble fears, Fed uncertainty rattle Wall Street
Massive AI spending drove two-thirds of U.S. GDP growth in early 2025, but roughly 95% of AI investments failed to generate profits, raising concerns about long-term returns.
- In recent weeks, Wall Street has swung on fears of an AI bubble amid heavy corporate AI investment, rattling the U.S. stock market despite chip giant Nvidia's major profits.
- JPMorgan Asset Management found a surge of AI spending propelled GDP growth in the first half of 2025, while many large corporate investors poured funds into chips and data centers.
- An MIT study in July found roughly 95% of businesses investing in AI failed to make money, while AI systems' energy and compute costs rise with usage, increasing operating expenses.
- Critics note that high infrastructure and operating costs pressure AI to promise huge profits despite little evidence businesses will pay, while David Sacks cautioned on Monday that a reversal of AI investment could risk recession.
- Analysts caution that AI must deliver within years not decades, and proponents of AI adoption say monetization paths include advertising or paid access despite expected infrastructure-productivity lags.
15 Articles
15 Articles
Warning: Here's Why The Fed Can't Rescue Markets From AI Bubble
While everything feels political now – a kind of fin de siècle chaos politics – I want to take a brief break from the political today. Instead I want to talk about asset markets and the Fed.We could say that the US economy in 2025 was schizoid. On the one hand Donald Trump abruptly reversed 90 years of U.S. trade policy, breaking all our international agreements, and pushed tariffs to levels not seen since the 1930s. Worse, the tariffs keep chan…
Stocks whipsaw as AI bubble fears, Fed uncertainty rattle Wall Street
Sharp swings in financial markets have left investors reeling in recent weeks, as questions about a potential artificial intelligence (AI) bubble collide with uncertainty surrounding the Federal Reserve’s next interest rate decision. The AI trade has been booming for nearly three years since the release of ChatGPT, but some are beginning to wonder how long this can last before shareholders get antsy for returns on firms’ massive multibillion-do…
Despite the increases in the last wheels, the New York Stock Exchange, which will operate half a day for Thanksgiving holiday, closes a November in red.
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