Jin Shi Shu Ju·2025-12-15 03:23Core Insights - The article discusses the growing skepticism among investors regarding AI investments, particularly in light of recent stock sell-offs of companies like Nvidia and Oracle, and the financial challenges faced by OpenAI [2][3] - There is a debate among investors about whether to reduce exposure to AI before a potential bubble bursts or to double down on investments to capitalize on the technology's disruptive potential [2] - Concerns about the high development costs of AI and whether consumers will ultimately pay for these services are critical to the future of the stock market [2] Investment Trends - The S&P 500 has seen a bull market worth $30 trillion over the past three years, primarily driven by major tech companies like Alphabet and Microsoft, as well as companies benefiting from AI infrastructure spending [2] - Major tech firms are expected to spend over $400 billion on capital expenditures in the next 12 months, largely for data centers, despite the costs outpacing revenue growth from AI [8][11] - The depreciation costs for major tech companies are rising significantly, with Alphabet, Microsoft, and Meta's depreciation costs expected to reach approximately $300 billion by next year [11] Financial Challenges - OpenAI plans to spend $1.4 trillion in the coming years but is projected to burn through $115 billion by 2029 before generating cash flow [3][4] - Oracle's stock has been negatively impacted by higher-than-expected capital expenditures and underwhelming cloud sales growth, leading to increased credit risk [4][11] - Concerns about the sustainability of funding for AI initiatives are growing, with potential repercussions for companies reliant on external financing [4][8] Market Valuation - The current valuation of tech stocks, particularly those involved in AI, is not at the extreme levels seen during the internet bubble, with the Nasdaq 100's price-to-earnings ratio at 26 times expected earnings [12] - Some AI-related stocks, like Palantir and Snowflake, have extremely high valuations, while major players like Nvidia, Alphabet, and Microsoft maintain more moderate price-to-earnings ratios below 30 [12][13] - The article suggests that while there is a risk of a market correction, the current pricing of most companies does not yet warrant panic [13]