The market has seen a sharp turnaround from prior years, when the promise of AI helped drive US stock indexes to record after record. Now, companies in industries as varied as software and legal services and trucking have seen investors suddenly turn against them when worries flare that AI-powered competitors could steal their customers.
The companies spending big on AI are feeling their own pressure, too.
Global fund managers say they are worried about the risk that companies are pouring too many dollars into AI data centres and chips. Those companies will need to see tremendous profits and productivity to make their investments worth it. Alphabet, for example, said its spending on AI and other investments could double this year to roughly US$180 billion.
A survey of global fund managers by Bank of America found a record percentage is saying that companies are “overinvesting”. That could mean an eventual pullback in spending on chips from Nvidia and other companies.
All told, the S&P 500 added 7.05 points to 6,843.22. The Dow Jones Industrial Average rose 32.26 to 49,553.19, and the Nasdaq composite gained 31.71 to 22,578.38.
In the bond market, Treasury yields held relatively steady.
The yield on the 10-year Treasury edged up to 4.05 per cent from 4.04 per cent late Friday.
In stock markets abroad, indexes rose in Europe following a quiet day in Asia, where most markets were closed for Chinese New Year holidays.
Japan’s Nikkei 225 slipped 0.4 per cent. Weak economic data for Japan appeared to weigh on the market, and a 5.1 per cent decline for tech giant SoftBank Group also pulled shares lower. The decline followed a big rally after a Feb 8 general election appeared to clear the way for Prime Minister Sanae Takaichi’s ruling party to push through policies to help the economy.