AI Boom Or Bubble? Here’s An 8-point Checklist To Separate Strength From Hype

SAXO

Stocks

Economic

Summary:

In our view, AI remains one of the most powerful forces reshaping markets, but the tone is changing.

Key points:

· Strong earnings from AI leaders have not fully eased concerns about stretched valuations and execution risks.

· In our view, the next phase of the AI cycle will reward companies that can fund, scale, and monetise AI sustainably — while those relying heavily on hype or debt may face more volatility.

· Investors can use a simple checklist to navigate the noise, while recognising both the opportunities and the risks.

AI's reality check: Why investors want proof, not promises

In our view, AI remains one of the most powerful forces reshaping markets, but the tone is changing. Strong earnings from leading chipmakers e.g., Nvidia's Q3 FY2026 revenue grew 62% YoY (Source: Nvidia Investor Relations) reassure investors that demand is real, yet the sharp swings in market reaction show that enthusiasm now sits alongside questions around sustainability, profitability, and execution.

The broad "everything goes up" phase of the AI trade is fading. What replaces it is a more nuanced market: one that rewards fundamentals over narratives.

Investors now face a key challenge of understanding which companies have the financial and operational strength to compete through cycles. That will potentially help them to separate the durable players from those caught up in the momentum.

Below is a simplified but strategically meaningful framework that could be used to decode the AI ecosystem.

A simple 8-factor checklist to evaluate AI stocks

1. Can the company afford the AI race?

Why it matters: AI is extremely capital-intensive. Companies investing in chips, power, and data centres need financial strength to survive both growth phases and volatility.

What to look for:

· Positive and stable cash flow

· Low or manageable debt levels

· Ability to self-fund AI investments

Risks: Heavy borrowing or negative cash flow may amplify volatility.

2. Is AI already adding to revenue?

Why it matters: Investors are becoming more selective; they want to see AI adding real business value, not just product demos.

What to look for:

· AI-linked revenue mentioned in earnings

· Clear pricing for AI features

· Evidence customers are willing to pay for new capabilities

Risks: Companies that invest ahead of monetisation may face margin pressure.

3. Does the company have infrastructure advantage?

Why it matters: AI needs chips, land, power, cooling, and network bandwidth. Access to scarce infrastructure is becoming a major competitive edge.

What to look for:

· Secure chip supply (Nvidia/AMD/custom silicon)

· Capacity to expand data centres

· Plans to manage energy demand

Risks: Delays due to power shortages or supply constraints.

4. Does the company control unique data?

Why it matters: As models get more similar, proprietary data becomes the true differentiator.

What to look for:

· Large user bases

· Exclusive datasets or industry-specific data

· Strong partnerships that expand data access

Risks: Companies relying on public data face weaker defensibility.

5. Are customers staying and using more?

Why it matters: Sticky customers create recurring revenue and lower the risk of AI investments not paying off.What to look for:

· High renewal rates

· Growing engagement or usage after AI rollouts

· Enterprise contracts with long durations

Risks: Churn or weak engagement can quickly erode the AI narrative.

6. How dependent is the company on a few large customers?

Why it matters: Many AI suppliers — especially in chips, cloud infrastructure, and data-centre services — rely heavily on a small number of hyperscalers. When 20–50% of revenue comes from one or two clients, even a slight pause in spending can create sudden earnings volatility.

What to look for:

· No single customer accounting for more than 20–30% of revenue

· Diversified demand across cloud providers, enterprises, and industries

· Clear signs that new customers are being added each quarter

· Long-term contracts that offer visibility into future spending

Risks: Revenue may fall sharply if a major customer delays capex, shifts to an in-house solution, renegotiates pricing, or reduces reliance on the company's AI infrastructure.

7. Is management realistic about AI timelines?

Why it matters: Markets are punishing over-promising and rewarding measured execution.

What to look for:

· Clear timelines and cautious guidance

· Credible communication during earnings

· Track record of delivering what they announce

Risks: Missed timelines or shifting goalposts raise credibility concerns.

8. Is the valuation pricing in too much perfection?

Why it matters: Elevated expectations increase volatility, especially in an environment where interest rates may stay higher for longer.

What to look for:

· Valuation relative to peers

· Earnings forecasts vs. price multiples

· Market sentiment and crowding

Risks: Stocks with perfection priced in can fall sharply on small disappointments.

How popular AI names score across these factors

Illustrative only. Not investment advice.Reasoning is simplified to help investors understand strengths and risks.

Source: Saxo

Final thoughts

While AI is clearly transforming industries and driving a multi-year investment cycle, in our opinion the next stage of this cycle may reward companies that balance ambition with financial strength, operational execution and diversified demand.

This 8-factor checklist gives investors a simple, structured framework to evaluate AI stocks, acknowledging both the potential upside and the meaningful risks.

Source: SAXO

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Gerik

Economic

Stocks

Markets Respond to Fed Rate Cut Hopes

Asia-Pacific markets began the week on a positive note, buoyed by renewed optimism that the U.S. Federal Reserve could implement a third rate cut this year. This optimism stemmed from comments made by New York Fed President John Williams, who suggested that a weakening labor market might pose a greater economic risk than persistent inflation. The possibility of a rate cut has gained traction, with Fed funds futures showing a 70% chance of a quarter-percentage-point reduction during the Fed’s December meeting, up from about 44% in mid-November.

Following a turbulent week of losses, particularly in tech stocks, the outlook turned brighter. Hong Kong’s Hang Seng index rose by 1.41%, fueled by gains in tech and healthcare stocks. Australia’s S&P/ASX 200 rebounded by 1.12%, reversing a 1.59% loss from Friday, with significant movements in logistics and mining stocks. South Korea’s KOSPI index increased by 1.56%, while Japan’s markets were closed for a public holiday.

In contrast, mainland China’s CSI 300 was nearly flat, and the Nikkei 225 in Japan saw a decline of 2.4%. Despite this, Samsung Electronics posted a notable 4.4% gain, while other tech stocks, including SoftBank and Baidu, continued to face challenges after recent losses.

Impact of Economic Data and Global Sentiment

The rebound in Asia-Pacific markets followed a mixed performance last week, with tech stocks particularly hard-hit as traders pulled back amid concerns over the AI sector. However, the possibility of a rate cut from the Fed has provided fresh momentum. Investors are hoping that the Fed will prioritize economic stability and address labor market weakness in its upcoming decision.

The upcoming release of key economic data, including U.S. retail sales, producer prices, and jobless claims, is expected to further shape expectations for the Fed’s actions and could influence market movements in the coming weeks.

Causal Dynamics and Market Sentiment

The positive shift in market sentiment is driven by a combination of factors: the potential for lower borrowing costs, stabilizing expectations for economic growth, and the easing of pressure on inflation. These elements together have restored some confidence in global equity markets, despite the continued volatility in the tech sector.

As markets weigh the potential for a Fed rate cut and digest the latest economic indicators, investor sentiment in the Asia-Pacific region has turned cautiously optimistic. With key markets such as Hong Kong, South Korea, and Australia posting gains, the path forward will depend on how the global economic narrative evolves and whether the Fed moves to ease rates in December.

Source: CNBC

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James Whitman

Economic

Singapore's inflation rate climbed for a second straight month, year on year, with price growth in October hitting a near 1-year high and topping analysts' expectations.

After hitting a four-year low in August, consumer prices rose 1.2% — highest since August 2024 — compared with the average 0.9% estimated by economists polled by Reuters and the 0.7% rise in September.

Core inflation in the city-state — which strips out prices of accommodation and private transport — also rose to 1.2%, up from 0.4% and compared with the 0.7% expected in the Reuters poll.

On a month-on-month basis, the consumer price index was flat, with core inflation coming at 0.5% compared to the prior month.

Inflation data comes as Singapore on Friday sharply upgraded its economic growth forecast to 4% from 1.5%-2.5%, as it posted robust third-quarter GDP numbers.

The economy grew 4.2% in the third quarter from a year earlier, beating estimates and extending the second quarter's 4.7% expansion. Singapore's Ministry of Trade and Industry said that global economic conditions had turned out more resilient than expected, but warned that growth would likely cool in 2026 as U.S. tariffs weigh on global demand.

Singapore's exports to the U.S. are subject to a 10% baseline tariff, despite the country having a trade deficit with the U.S. and also a free trade agreement going back to 2004.

The country's economy is hugely dependent on trade, with World Bank data showing that Singapore has a trade-to-GDP ratio of over 320% in 2024.

In the third quarter, Singapore recorded a 3.3% fall in non-oil domestic exports, or NODX, year on year, dragged by weaker pharmaceutical and petrochemical exports.

In October though, NODX surged 22.2% compared to a year earlier, driven by exports of non-monetary gold and electronic products.

The Monetary Authority of Singapore has forecast inflation around 0.5% to 1% for 2025.

The MAS held monetary policy unchanged in its October meeting, saying that Singapore's economic growth had been stronger than expected.

Source: CNBC

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Winkelmann

Political

Economic

Duduzile Zuma-Sambudla is a member of parliament for the MK Party [FILE: November 10, 2025]

South African police on Sunday confirmed they are investigating claims that Duduzile Zuma-Sambudla, daughter of former President Jacob Zuma, and two others conned 17 men into fighting for Russia in Ukraine.

Another of Zuma's daughters, Nkosazana Bongamini Zuma-Mncube, accused her stepsister of sending the men to Russia before they were ordered to the front lines.

"These men were lured to Russia under false pretenses and handed to a Russian mercenary group to fight in the Ukraine war without their knowledge or consent. Among these 17 men are eight of my family members," Zuma-Mncube said in a public statement.

Earlier this month, President Cyril Ramaphosa's office said it "received distress calls for assistance to return home from 17 South African men, ages 20 to 39, who are trapped in the war-torn Donbas."

South Africans fighting for Russia in Ukraine

Zuma-Sambudla, who is also a member of parliament for her father's uMkhonto weSizwe party (MK), did not immediately respond to the accusations.

She reportedly told the men they would train as bodyguards to work for the party.

On November 6, the South African Presidency said in a statement that the men were promised "lucrative employment contracts." Ramaphosa ordered an inquiry into how the men were recruited.

South African law prohibits citizens from fighting for foreign armies without government authorization.

Zuma-Mncube urged the government "to expedite all diplomatic efforts to secure the immediate and safe return of our citizens."

Zuma-Sambudla also on trial over deadly riots

The latest police investigation comes as Zuma-Sambudla is already on trial for allegedly inciting violence during riots in 2021 that left more than 300 people dead.

The unrest broke out in July 2021 after her father was arrested for disobeying a court order to testify at a corruption inquiry, and it morphed into widespread looting.

Zuma-Sambudla has consistently voiced strong support for her father, former president Jacob Zuma [FILE: December 16, 2023]Image: Themba Hadebe/AP Photo/picture alliance

She pleaded not guilty to the charge during a hearing in early November attended by Zuma.

He was South Africa's president from 2009 to 2018.

MK was a major disruptor in last year's national election, contributing to a sharp drop in support for the African National Congress, which Zuma once led.

Source: DW

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Justin

Economic

The World Bank lifted Kenya's economic growth forecast for this year to almost 5% on Monday, citing a pick up in the construction sector in East Africa's largest economy.

Some of Kenya's main industries like construction suffered last year, partly as concerns mounted about the government's finances, but the trend has begun to reverse, the development lender said.

"Signs of recovery are emerging," a new report on Kenya's economy said, adding that the rebound in construction in the first half of 2025 had offset a slowdown in manufacturing.

The result is that the economy is now projected to grow by 4.9% this year, up from the World Bank's May forecast of 4.5%, and maintain that rate of growth over the next two years.

Risks to the outlook stem from international trade uncertainty, including the expiry of a U.S. trade deal with the region, and ongoing fiscal consolidation that could curb government spending, the report said.

Government officials say Kenya's economic expansion has also been negatively affected by a heavy public debt burden characterised by high annual repayments that have absorbed much of its revenue.

The government has turned to measures like loans securitised on a motorists' road maintenance levy on petrol prices to raise funds to pay road contractors who had abandoned sites last year due to lack of payment.

It is also in talks with the International Monetary Fund to secure a new financial support programme. Differences remain, however, including over whether the securitised borrowing should be classified as government debt or not.

Monday's World Bank report laid out a set of reforms the government should carry out to boost competition and support investment and economic growth.

Barriers to competition include the presence of more than 200 state owned firms that benefit from undue advantages, distorting competition, and restrictions on foreign investments, it said.

"There is significant room to make Kenya's regulatory framework less restrictive to competition," the lender said.

Source: TradingView

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Justin

Economic

Political

Russia-Ukraine Conflict

· US and Ukraine draft refined peace framework in Geneva talks

· Trump's peace plan criticized as favoring Russia, faces opposition

· European allies propose counter-plan with US security guarantee for Ukraine

The United States and Ukraine were set to continue work on Monday on a plan to end the war with Russia after agreeing to modify an earlier proposal that was widely seen as too favorable to Moscow.

The two sides said in a joint statement they had drafted a "refined peace framework" after talks in Geneva on Sunday, although they did not provide specifics.

The White House separately said the Ukrainian delegation had told them it "reflects their national interests" and "addresses their core strategic requirements," although Kyiv did not issue a statement of its own.

It was not clear how the updated plan would handle a host of issues, including how to guarantee Ukraine's security against ongoing threats from Russia. The United States and Ukraine said they would continue "intensive work" ahead of a Thursday deadline, although U.S. Secretary of State Marco Rubio, who led the American delegation during the talks, was flying back to Washington late on Sunday.

U.S. President Donald Trump has kept up the pressure on Ukraine to reach a deal. On Sunday, he said Ukraine had shown "zero gratitude" for American efforts over the war, prompting Ukrainian officials to emphasize their thanks for Trump's support.

Trump previously set a Thursday deadline for Ukrainian President Volodymyr Zelenskiy to accept a peace plan, but Rubio said on Sunday that deadline might not be set in stone.

Zelenskiy could travel to the United States as soon as this week to discuss the most sensitive aspects of the plan with Trump, according to sources familiar with the matter.

The initial 28-point proposal put forth by the United States last week called on Ukraine to cede territory, accept limits on its military and abandon its ambitions to join NATO. Those terms would amount to capitulation for many Ukrainians after nearly four years of fighting in Europe's deadliest conflict since World War II.

The original plan came as a surprise to U.S. officials across the administration, and two sources said it was crafted at an October meeting in Miami that included special envoy Steve Witkoff, Trump's son-in-law Jared Kushner, and Kirill Dmitriev, a Russian envoy who is under U.S. sanctions.

EUROPEAN NATIONS ISSUE COUNTER-PROPOSAL

Democratic lawmakers have criticized it as essentially a Russian wish list, but Rubio has insisted that Washington authored the plan with input from both sides in the war.

European allies said they were not involved in crafting the original plan, and they released a counter-proposal on Sunday that would ease some of the proposed territorial concessions and include a NATO-style security guarantee from the United States for Ukraine if it is attacked.

The talks come as Russia has slowly gained ground in some regions, while Ukraine's power and gas facilities have been pummeled by drone and missile attacks, leaving millions of people without water, heating and power for hours each day.

Zelenskiy has also been under pressure at home, as a major corruption scandal has ensnared some of his ministers, stirring fresh anger at pervasive graft. That has complicated the country's efforts to secure funding to keep its economy afloat.

Kyiv had taken heart in recent weeks after the United States tightened on Russia's oil sector, the main source of funding for the war, while its own long-range drone and missile strikes have caused considerable damage to the industry.

Source: Reuters

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Gerik

Economic

Commodity

Market Balances Fed Rate Cut Expectations As Gold Holds Firm

Gold prices remained stable in early Monday trading across Asia, reflecting a market cautiously assessing the Federal Reserve's next move on interest rates. The commodity has entered a holding pattern, driven by a blend of dovish remarks from influential Fed officials and a lack of fresh economic data due to the recent U.S. government shutdown.

On Friday, gold pared earlier losses after New York Fed President John Williams suggested there is room for a near-term cut in borrowing costs. His comment stood in contrast to the more guarded tone from other Federal Reserve officials, revealing a policy divide that has left investors guessing. Despite Williams' supportive remarks, gold ended Friday’s session slightly lower, showing that market confidence remains tentative.

Economic Data Vacuum Keeps Traders Cautious

The 43-day U.S. government shutdown has delayed several key data releases that typically inform interest rate expectations. Crucial figures such as September retail sales and producer price data due Tuesday, and weekly jobless claims on Wednesday are now expected to provide clearer insight into the current health of the economy. In the absence of this data, market sentiment remains speculative.

Fed fund futures currently reflect a roughly 60% probability of a 25-basis-point rate cut at the next FOMC meeting. This aligns with growing expectations that the Federal Reserve may take action to counteract softening labor conditions and address persistent macroeconomic headwinds, particularly with inflationary pressures showing signs of moderation.

Technical Pause After Record Highs

From a price trend perspective, gold has entered a consolidation phase following its meteoric rise to an all-time high above $4,380 per ounce on October 20. As of Monday morning in Singapore, spot gold was quoted at $4,064.32 per ounce, largely unchanged, after losing 0.3% in the previous session. The Bloomberg Dollar Spot Index gained 0.1%, slightly reducing gold’s upside due to their inverse correlation.

Despite the current plateau, gold remains one of the top-performing assets in 2025, gaining approximately 55% year-to-date. This performance has been largely supported by geopolitical instability, ongoing trade tensions, and worsening fiscal balances in key economies factors that have historically driven flight-to-safety behavior and enhanced the appeal of bullion.

Gold’s Sensitivity to Monetary Signals

The link between rate expectations and gold prices is causal rather than merely correlated. Lower interest rates tend to reduce the opportunity cost of holding non-yielding assets like gold, making them more attractive relative to interest-bearing instruments. Thus, dovish Fed commentary particularly from a central figure like John Williams has a direct impact on bullion sentiment.

However, this causal influence is currently diluted by data uncertainty. Without timely inflation or employment reports, markets cannot fully validate Fed signals, which introduces a feedback gap and suppresses stronger directional moves in gold.

Awaiting Clarity in a Foggy Macro Landscape

Going forward, the short-term trajectory of gold will depend heavily on this week’s economic releases and any further policy hints from Fed officials. If upcoming data confirms economic cooling or rising joblessness, the likelihood of a December rate cut will increase, strengthening gold's upside momentum.

At the same time, traders remain wary of premature pricing, especially given that inflation data like CPI will only arrive after the Fed’s December meeting. This timing gap could either force the Fed to act preemptively or maintain a holding stance, both scenarios carrying implications for gold.

Gold’s stability at current elevated levels reflects a market in transition: driven by policy speculation, constrained by delayed data, and bolstered by systemic risk factors. As investors await a clearer picture from upcoming U.S. economic indicators, the metal’s next move hinges on whether the Fed reinforces or retreats from its softening stance. In the meantime, gold remains a barometer of uncertainty both economic and geopolitical.