"The sudden dip comes after months of investor euphoria. The S&P 500 index has risen over 20 percent over the last six months alone, only to decline just under two percent over the last five days, indicating growing concerns over AI hype that grew too much, too fast. Companies have been pouring hundreds of billions of dollars into major AI infrastructure buildouts, despite revenues lagging far behind."
""We haven't really seen any major corrections or any real pressure on stocks since April," Ameriprise chief market strategist Anthony Saglimbene told CNBC. "Profits are good, but I think investors are starting to ask themselves, based on the pace of [capital expenditure] investments from some of these key Big Tech companies, 'Are you going to see the profit growth over the next year to justify the levels of capex?'""
AI-focused large-cap companies including Oracle, Nvidia, AMD, Amazon, and Palantir experienced sharp share declines amid growing investor concern about extreme valuations and profit prospects. Many of these firms carry very high price-to-earnings ratios, with Palantir valued at over 200 times forward earnings, raising questions about revenue growth needed to justify prices. The S&P 500 climbed more than 20 percent over the prior six months before slipping nearly two percent in five days. Corporations have invested hundreds of billions into AI infrastructure while revenues trail, prompting scrutiny over whether near-term profit growth will validate heavy capital expenditures.
Read at Futurism
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