Investors Reprice AI Ambitions as Data Center Growth Outruns Monetization

Stocks

Summary:

AI stocks stumble as data-center spending outruns revenue, valuations stretch, and funding jitters grow — hitting smaller players first while megacaps and chipmakers remain better positioned.

There’s a fine line between a bubble and a market simply tripping over its own shoelaces when too many risk events collide at once. Right now, global equities feel less like 1999 mania and more like a high-speed convoy hitting a patch of converging hazards — AI funding math coming due, data-center capex that refuses to stay in its lane, geopolitics flaring, and bond markets twitching under the weight of the Fed’s hawkish recalibration. In this kind of traffic, even normal corrections look like smoke on the horizon.

But let’s start with the so-called AI bubble — the narrative du jour that refuses to die. You can practically hear the old-school market sages muttering that you only recognize a bubble in the rear-view mirror. And yet, the chatter today isn’t coming from the usual cranks; it’s bubbling up because expectations have sprinted well ahead of reality.

That alone doesn’t make this a ticking time bomb. It makes it what the early innings of every transformative tech cycle look like: investors pricing futures that haven’t been built yet.

The real fracture zone isn’t mystical; it’s steel, concrete, transformers, and debt. The data-center buildout remains the beating heart of the AI capex surge, and the industry is laying track faster than the revenue trains can realistically run on it. The OpenAI–Nvidia (NASDAQ:NVDA) $100bn blueprint is a perfect example — only a tenth of that is actually committed, the other nine-tenths is vapor until demand proves itself and someone coughs up the financing.

For now, capacity is tight, not excessive. But plotted forward on any reasonable trajectory, supply catches up long before the monetization curve does.

Sam Altman practically admitted as much by pinning future revenue on products that don’t exist yet — enterprise expansions, cloud forays, robotics detours. That isn’t delusion; it’s the classic “we’ll grow into it” mantra that every capex-heavy revolution chants. But it also underscores the gulf between the cost of the buildout and the revenues needed to justify it. That’s the gap critics keep poking at — and they aren’t wrong to keep poking.

Still, handicapping growth is very different from claiming the technology will never pay its way. The deeper bubble risk lies not in the cranes and fiber lines but in the LLMs themselves: hallucinations, latency, and cost-to-run economics that, if left unresolved, could render wide swathes of AI chronically uneconomic. If that turns structural, then the capex overhang becomes a millstone. We just don’t know yet.

What we do know is that markets don’t wait patiently for clarity. If investors get spooked first — if the funding wheels wobble, if the AI debt machine hesitates — the selloff becomes its own self-fulfilling prophecy. That’s where the real correction risk lives: not in an implosion, but in a capital-rationing reset that forces weaker players to tap out.

OpenAI, Palantir (NASDAQ:PLTR), the single-product darlings with extreme multiples? They’d feel the blade first. Google (NASDAQ:GOOGL) and Microsoft (NASDAQ:MSFT), sitting on Fort Knox balance sheets and distribution dominance, would simply absorb the oxygen that others can’t afford.

And that’s the nuance missing from the “AI bubble” hot takes. Yes, some names are hanging on P/E ratios that assume everything breaks right. Palantir at 250x is expecting a hero’s journey with no bad chapters. Some will require years — maybe a decade — to grow into those skins. But the megacaps? Their multiples aren’t even nosebleed by the standards of this decade. If anything, the concentration risk has masked how un-bubbly the broader tech complex actually looks.

Meanwhile, the picks-and-shovels trade — the chips — is still running flat-out. AMD (NASDAQ:AMD) flagging a $1tn annual AI silicon market by 2030, with Nvidia set to reprise its earnings blowtorch next week. Yes, chip stocks are brutally cyclical, and yes, a data-center slowdown would bite hard. But no one sees that slowdown in the windshield right now.

So are we living through bubble trouble, or just a garden-variety correction amplified by too many risk wires crossing at once? The truth sits somewhere in the middle. Parts of the AI complex are priced for perfection. Parts are priced as industrials-in-disguise. And parts — the data-center landlords, the chip vendors, the hyperscaler balance-sheet giants — are behaving nothing like a speculative bubble.

Call it what it is: a crowded runway with far too many planes trying to take off at once. The turbulence isn’t proof of a crash. It’s the predictable shake when the air currents of rate risk, capex math, valuation gravity, and AI ambition finally converge in the same pocket of sky.

Source: investing

Risk Warnings and Disclaimers

You understand and acknowledge that there is a high degree of risk involved in trading. Following any strategies or investment methods may lead to potential losses. The content on the site is provided by our contributors and analysts for information purposes only. You are solely responsible for determining whether any trading assets, securities, strategy, or any other product is suitable for investing based on your own investment objectives and financial situation.

Add to Favorites

Adam

Economic

As Japanese authorities once again battle a slide in the yen, their efforts this time are struggling for traction, undermined by new prime minister Sanae Takaichi's promotion of advocates of big fiscal and monetary stimulus to key posts.

While Tokyo officials this week warned against sharp downward moves in the currency, maintaining the jawboning of previous administrations, their voices are increasingly competing with calls by new policy advisers preaching the benefits of a weak yen.

A proponent of expansionary fiscal and monetary policy, Takaichi filled seats in key government panels with advocates of big spending backed by low interest rates - policies that work to depreciate the yen's value.

For one, Takuji Aida, an economist who joined a panel on the government's growth strategy, stressed the benefits of a weak yen such as easing the blow to manufacturers from U.S. tariffs.

The reflationists' sanguine view on the weak yen contrasts with the concerns of previous administrations, who primarily focused on cost of living pressures caused by the currency's impact on imported inflation.

"The Takaichi administration hasn't escalated its warning, which suggests it is tolerating a weak yen," said Masafumi Yamamoto, chief currency strategist at Mizuho Securities.

"Given the administration doesn't seem to prioritise combatting a weak yen, it would take a slide below 155 per dollar for it to escalate verbal warnings and a fall below 160 to contemplate direct intervention in the market," he said.

To be sure, Finance Minister Satsuki Katayama warned on Wednesday that authorities were vigilant to "one-sided, sharp moves" in the exchange-rate market, adding the negative aspects of a weak yen have become more pronounced than the positives.

But the remarks failed to prop up the yen as they were short of more direct threats of currency intervention, such as that authorities were ready to take "decisive action."

Underscoring a lack of consensus within the administration, economic revitalisation minister, Minoru Kiuchi, said last month the weak yen had benefits to growth. On Tuesday, he said the boost to import costs from a weak yen was fading.

Such views have also helped fuel market expectations the Bank of Japan will be forced to go slow in raising interest rates, pushing the yen to a record low against the euro and a nine-month trough versus the U.S. dollar.

The dollar has risen about 5% against the yen since Takaichi won the ruling party's leadership race on October 4. It stood around 154.50 yen on Friday, after breaking a key milestone of 155 earlier this week.

INTERVENTION HURDLE HIGH

Japan last intervened in the currency market in July 2024 when the yen fell to a 38-year low of around 161.96 to the dollar. The BOJ also raised interest rates to 0.25% that month, causing the yen to strengthen to around 150 per dollar.

Such concerted action highlighted the concern then-premier Fumio Kishida had about a weak yen.

By contrast, Takaichi and her reflationist aides are fans of "Abenomics," a mix of big spending and bold monetary easing deployed in 2013. The policies helped reverse sharp yen rises blamed for prolonging deflation and economic stagnation.

Now, a weak yen has become a pain point for an economy that relies heavily on fuel and food imports. Yen declines have kept inflation above the BOJ's 2% target for well over three years, causing grumblings from households hit by rising living costs.

Mindful of broadening inflationary pressures, BOJ Governor Kazuo Ueda signaled the chance of a hike as soon as next month.

But Takaichi and her finance minister both made clear their displeasure over a near-term rate hike, saying Japan has yet to see inflation durably achieve the BOJ's target.

Almost a year since its last rate hike in January, investors have taken comfort in selling yen on prospects the BOJ is unlikely to hike steadily at a set pace.

"There's a higher chance than initially thought that Takaichi's administration would favour reflationary policies," said Ryutaro Kono, chief Japan economist at BNP Paribas.

"Given the administration's policy stance as suggested by the recent personnel appointments, it's hard to project the BOJ accelerating its pace of rate hikes," said Kono, who now expects the bank to hike twice next year instead of three times.

If BOJ rate hikes were put on hold, the only remaining tool to counter yen falls would be currency intervention.

But getting consent from Washington may be tough as U.S. Treasury Secretary Scott Bessent has repeatedly signaled that rate hikes are the best way to prop up the yen.

Former BOJ official Toru Sasaki expects Japan to hold off intervening unless the yen falls below 165 to the dollar.

"Conducting yen-buying intervention at a time Japan's real interest rates remain deeply negative would be wasting foreign reserves."

Source: reuters

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Devin

Economic

The United States will slash its tariffs on goods from Switzerland to 15% from a crippling 39% under a new framework trade agreement, the Swiss government said on Friday.

The announcement followed U.S. Trade Representative Jamieson Greer saying a deal between the two countries had been reached, adding that details would be announced later on Friday.

Richemont Chair Johann Rupert, who met President Donald Trump in the White House last week as part of a delegation of Swiss business executives, earlier had said he thought the punitive tariffs imposed by Washington were the result of a "misunderstanding" that would be cleared up quickly.

"The Swiss and the Americans are very much the same -- independent, don't like big government etc. etc., so I think this misunderstanding will be cleared up this week," Rupert told reporters after Richemont reported its latest results.

"I think we will hear more, from what I've gathered, we'll hear something today," Rupert said.

Swiss Economy Minister Guy Parmelin returned home on Friday after talks with Greer in Washington, saying: "We clarified virtually everything."

Parmelin declined to provide details of the discussions but said there would be further communication when everything is "finally clear."

The government gave no new details on Friday.

A Swiss source, speaking on condition of anonymity, said after the Thursday meeting that a deal had effectively been reached.

A senior U.S. official said the meeting was "very positive."

Richemont's Rupert met Trump last week to discuss the impact of tariffs, along with executives from MSC, Rolex, Partners Group, Mercuria, and MKS.

The meeting helped thaw relations with Washington, Swiss media reported, and Trump said earlier this week he was working on a deal to lower the tariffs on goods from Switzerland.

Rupert said it could be months before a deal is signed.

"It's dependent on President Trump, who's a very busy man. Our situation in Switzerland is one of the things he has to deal with," he said.

Swiss industry on Friday reported a 14% fall in exports to the U.S. during the three months to the end of September, technology industry association Swissmem said, while machine tool makers saw shipments slump 43%.

A potential reduction in tariffs to 15% would stabilise the Swiss economy, Rupert said, and prevent job losses caused by the higher duty.

"It's not only us," he added. "It's potentially devastating for the whole of Switzerland."

Source: Asia_Nikkei

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Winkelmann

Stocks

Economic

Key points:

· Case involves fatal crashes in 2018 and 2019 that killed 346 people

· Boeing had agreed to plead guilty during Biden administration

· Judge said he had no authority to reject deal struck under Trump administration

Families of some victims of two Boeing737 MAX plane crashes that killed 346 people asked a U.S. appeals court on Thursday to reverse a judge's decision to approve the Justice Department's request to dismiss a criminal case against the planemaker.

Judge Reed O'Connor, of U.S. District Court in Fort Worth, Texas, last week approved the request by the Trump administration's Justice Department, but harshly criticized the government's decision.

He said he did not agree that dismissing the case, which had been pursued under the Biden administration and initially resulted in an admission of guilt, was in the public interest.

The families asked the 5th Circuit Court to reverse his decision. They said the Justice Department violated their rights as crime victims when it negotiated a deferred prosecution deal with Boeing over a fraud charge stemming from false representations the planemaker made to the Federal Aviation Administration.

"We believe that the courts don't have to stand silently by while an injustice is perpetrated," said Paul Cassell, a lawyer for some of the families. "The charges against Boeing cannot simply be dropped."

Boeing did not immediately respond to a request for comment on Thursday. The Justice Department last week rejected the judge's criticism and said it believed the deal was "the most just outcome."

O'Connor said in 2023 that "Boeing's crime may properly be considered the deadliest corporate crime in U.S. history."

He said he had no authority to reject the government's decision to make a deal with Boeing, even though it "fails to secure the necessary accountability to ensure the safety of the flying public."

Boeing last year had agreed to plead guilty to a criminal fraud conspiracy charge after the fatal 737 MAX crashes in Indonesia and Ethiopia in 2018 and 2019.

After U.S. PresidentDonald Trumptook office, the Justice Department reversed course in May and dropped the demand for a guilty plea.

Under the deal, Boeing agreed to pay an additional $444.5 million into a crash victims' fund to be divided evenly per victim of the two fatal 737 MAX crashes, on top of a new $243.6 million fine and more than $455 million to strengthen the company's compliance, safety, and quality programs.

In September, the FAA proposed fining Boeing $3.1 million for a series of safety violations, including actions tied to a January 2024 Alaska Airlines 737 MAX 9 mid-air emergency, and for interfering with safety officials' independence.

Separately, a jury in Chicago on Wednesday ordered Boeing to pay more than $28 million to the family of Shikha Garg, a United Nations environmental worker who was killed in the crash in Ethiopia. Under a deal between the parties, the family will receive $35.85 million - the full verdict amount plus 26% interest - and Boeing will not appeal.

Source: TradingView

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Adam

Commodity

After 43 days, the U.S. government is back in business, and while the end of the longest government shutdown in history has improved geopolitical sentiment, it has done little to stifle gold’s bullish momentum.

The yellow metal continues to see a solid recovery from last month’s sharp selloff. Spot gold is holding new support at $4,200 an ounce.

Although geopolitical uncertainty has diminished slightly, one analyst expects the focus to shift to a much bigger problem: the U.S. government’s unsustainable debt, which continues to rise as President Donald Trump shows himself to be another spendthrift politician.

Trump has once again made headlines as he promises to send Americans $2,000 checks using money raised from elevated tariffs. He has also promised $10,000 bonuses for “patriot” air traffic controllers. Trump has further floated the idea of creating 50-year mortgages.

Nicky Shiels, Head of Research and Metals Strategy at MKS PAMP, said this fiscal environment is positive for hard assets like gold and silver.

“All this is simply bringing forward stimulus to the broader economy, because the administration understands parts of the economy are slowing; it’s a preview of what's to come (stimulus) into midterms. Trump is going to run the U.S. hot at the expense of deficits & the US’ fiscal state into Nov ’26, because they must pivot more populist following recent election results,” she said in a note.

The U.S. government already has difficulty selling its debt. This week, the U.S. Treasury saw weaker-than-expected participation in both 10-year and 30-year bond auctions. Analysts note that 30-year bond sales have been soft for most of this year.

Shiels said that Trump’s 50-year mortgage idea could be the most problematic. While American consumers would have lower monthly housing costs, the interest on a 50-year mortgage would be nearly double.

“Essentially, it's just an IOM, effectively just renting a place from the bank, and importantly, it might be a path to the 50yr Treasury bond and terming out the debt,” she said.

Looking ahead, Shiels said that all this financial market uncertainty could continue to support gold and silver prices, and investors might even see a Santa Claus rally into the new year.

Source: kitco

Risk Warnings and Disclaimers

Add to Favorites

Olivia Brooks

Political

Economic

Kansas City Federal Reserve President Jeffrey Schmid indicated Friday that he might dissent again at the Fed's December meeting if policymakers decide to cut interest rates further, citing persistent inflation concerns that extend beyond tariff impacts.

Schmid was one of two officials who opposed the Fed's October decision to lower the policy rate by a quarter percentage point to the 3.75%-4.00% range. In his remarks at an energy conference in Denver co-hosted by the Dallas and Kansas City Fed banks, he explained his position.

"I view the current stance of monetary policy as being only modestly restrictive, which is about where I think it should be," Schmid said, reiterating his belief that cooling in the U.S. job market stems from structural changes that lower interest rates cannot address.

The Kansas City Fed president expressed concern that additional rate cuts could undermine the Fed's 2% inflation target. "This was my rationale for dissenting against the rate cut at the last meeting and one that continues to guide my thoughts as I head into the meeting in December," he stated, while noting his final decision would depend on upcoming economic data.

Schmid emphasized that his inflation worries go beyond tariffs. "Though tariffs are likely contributing to higher prices, my concerns are much broader than tariffs alone," he said, pointing to uncertainty about when and how businesses will pass higher costs to consumers.

Several Fed policymakers have voiced similar inflation concerns since the October meeting, creating tension with those who fear the labor market could deteriorate without further rate cuts. This division suggests the December 9-10 meeting will involve intense debate.

Schmid also warned about inflation expectations, saying the Fed has "no room to be complacent" and that "persistent inflation can shift the psychology around price-setting, and inflation can become ingrained." He cautioned, "It is unlikely that we will still be talking about soft landings in that situation."

Source: Investing

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Adam

Bond

Not that long ago, bond yields were rising as concerns over deficits, inflation, and a series of bad Treasury auctions were paraded through the media. We bring this to your attention as the 10-year Treasury auction on Wednesday was on the weaker side, yet the bond market reaction was minimal.

Additionally, government deficits are just as problematic today as they were in May when the 30-year Treasury bond hit 5.15%. In May, when yields were peaking and bond market narratives, such as the bearish bond sentiment, were spreading fear of much higher yields, year-over-year CPI was 2.37%. Today it’s a touch over 3%.

Since May, bond yields have fallen by about half a percentage point, yet inflation has moved higher, and there doesn’t seem to be an end to excessive government spending. Furthermore, the Fed has been conducting QT, which drains liquidity and leaves the supply of Treasury bonds higher than it would otherwise be. What this tells us is that the bearish bond narrative has lost its steam. As we wrote in January:

Bond investor sentiment does impact yields and can be relatively accurately quantified, unlike the stock market. In bond market parlance sentiment is called the “term premium or discount.”Quantifying the term premium or discount and, equally important, understanding the market narratives responsible for the premium or discount is valuable.

With such knowledge, one can assess whether the narratives make sense. Thus, is the premium or discount likely to be sustained? If the narrative(s) are illogical, there could be an opportunity to profit when the premium or discount normalizes.

The graph below shows that the term premium (purple) has steadily declined, suggesting the narrative, particularly the bearish bond sentiment, is less impactful than it was.

The Big Short Shuts Down

Michael Burry, famed for predicting the 2008 housing/subprime crash and his likeness played a lead role in Michael Lewis’s book and movie The Big Short, is exiting his hedge fund, Scion Asset Management. Recently, he deregistered with the SEC and sent the letter below to his clients.

Scion only managed $155 million as of their last reporting date. While his hedge fund was small, his social media presence was significant. Recently, Burry has been pointing out that the depreciation periods some of Nvidia’s (NASDAQ:NVDA) clients are taking for their chips are much longer than the chips’ useful lives.

Doing so inflates earnings by decreasing expenses. Per Benzinga, he estimates that Oracle’s (NYSE:ORCL) profits could be overstated by 26.9% and Meta’s (NASDAQ:META) by 20.8%. Furthermore, he recently hinted at more details in a forthcoming disclosure on November 25 amid his broader bearish bets, including short positions on Nvidia and Palantir (NASDAQ:PLTR) and a discussion of bond issuance by Meta and Google (NASDAQ:GOOGL).

Healthcare Stocks Rebound: Which Sector Is Next?

For a good chunk of this year, healthcare stocks lagged the broader S&P 500. In fact, on July 22, we wrote a Commentary titled Will The Healthcare Sector Be The Next Rotation? In that article, we wrote:

As shown below, the P/E ratio of the healthcare sector compared to the S&P 500 is the lowest it has been in the last 30 years. Moreover, its absolute P/E is in the lower third of readings over the past 30 years. The sector is also very cheap and very oversold on a shorter-term technical basis.

The answer to our article is yes, healthcare stocks have recently rotated into favor. The table below shows the relative performance of each sector versus the S&P 500 over the last 10 days and in 90-day increments going back to late 2024. As shown, healthcare stocks have outperformed the market by 6.72% over the last 10 days.

Further, the graphic below the table shows that recent buying in healthcare has brought its absolute score to .90, which is a very overbought level. While the sector may consolidate on both relative and absolute terms, it still has significant room to catch up with the broader market. Compare the recent 10-day returns in the table to the prior three sets of 90-day returns for context.

Are the staples, financial, or energy sector next to follow the healthcare lead and play catch-up?