"Yet some analysts are saying that you should believe the hype. They argue: Corporate demand for AI tools is real and growing. AI build-out is being funded by hard cash from tech company balance sheets, not risky debt. Stock valuations are not as extreme as they were in the dotcom crash of 2000. And even if a crash in AI did happen, the fallout wouldn't tip the U.S. into recession."
""The cloud stalwarts Microsoft, Alphabet, and Amazon had very robust AI enterprise demand in the quarter based on our field checks. While some investors continue to question the valuations and pace of this tech spending trend, we believe to the contrary the Street is still underestimating how big this AI spending trajectory is," he told clients. He believes these companies will spend $3 trillion on AI over the next three years. Importantly, that spending isn't coming from debt or VC funding, according to Jan Frederik Slijkerman and Timothy Rahill at ING."
The S&P 500 and Nasdaq recently reached new highs driven by technology stocks despite warnings that AI might be a bubble and that stocks could correct sharply. Gold's record price signals investor hedging against potential tech implosion. Corporate demand for AI tools is substantial and expanding. AI infrastructure expansion is being financed primarily from tech company cash on balance sheets rather than risky debt or venture funding. Current stock valuations are not as extreme as during the dotcom era. A sharp correction in AI-related stocks is unlikely to push the U.S. economy into recession.
Read at Fortune
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