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-dollar investments.
Meanwhile, investors are searching for clues on whether the Fed will cut rates next month amid a murky economic picture, complicated by missing data from the government shutdown.
The result has been significant market volatility over the past month, with a key volatility index reaching its highest level since April, when President Trump unveiled his wide-ranging tariff regime.
"There's just a lot of uncertainty and conflicting signals in the market that are creating that volatility," Catalyst Funds co-founder David Miller told The Hill.
The Dow Jones Industrial Average, Nasdaq composite, and S&P 500 index closed with slight gains on Wednesday as markets closed ahead of Thanksgiving, marking their fourth straight day in the green.
The four-day rally pushed all three major stock indexes back above their levels one month ago, before a steep selloff driven by AI bubble fears.
Central to the recent swings are growing concerns about the future of the AI boom. Major players, like Nvidia, Microsoft, Meta and Oracle, have seen their stock prices slide since early November amid fears that the AI trade has been overhyped. Apple and Google have notably bucked this trend.
As these companies continue to commit billions of dollars to AI investments, questions have emerged about whether and when they will see a return.
The increasingly circular nature of deals between key AI firms and the emergence of debt financing are also spooking investors, who are quick to draw comparisons to the dot-com bubble.
This has weighed on the broader market, which is highly dependent on major tech stocks.
The contingent of companies known as the Magnificent Seven — Amazon, Apple, Alphabet, Meta, Microsoft, Nvidia and Tesla — represent about a third of the S&P 500's market capitalization.
Check out the full story at TheHill.com tomorrow morning.
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