Core Opinion - There is a growing belief that shorting the entire AI sector may be a viable strategy due to the lack of monetization and sustainability in the business model, as most users do not pay for AI services [1][3][18] Industry Insights - The AI sector is characterized by significant investments, with trillions of dollars spent on infrastructure, data centers, and training models, yet the majority of users are not paying customers [3][4][19] - Companies that build specialized AI tools for specific industries, such as law, healthcare, and logistics, are seen as having better monetization potential compared to foundational AI builders [2][14] - A McKinsey study supports the notion that future AI monetization will rely on targeted, value-based services rather than broad, free offerings [2] Market Concerns - The current state of the AI market resembles a bubble, with hedge funds and analysts expressing concerns over inflated valuations, particularly in companies like Nvidia [3][7] - Reports indicate that AI monetization is still in its early stages, with consumer AI struggling to find sustainable revenue models and high infrastructure costs [3][19] - The prevailing business model of offering AI services for free is unsustainable, as historical precedents show that successful businesses typically require a substantial number of paying customers [5][18] Future Projections - The potential for an AI collapse is highlighted, as the inability to charge for AI services could lead to significant financial challenges for companies in the sector [18][20] - Companies that can adapt AI applications for specific business needs and charge for those services are projected to be more successful in the long run [14][19]

With all the risks facing investors these days — from high valuations in the stock market to worries about an AI bubble and beyond — some might be tempted to stick their cash under the mattress. ...

Market Overview - A mixed start is predicted for Wall Street stocks, with Nasdaq and S&P 500 futures down 0.2% and 0.1% respectively, while Dow Jones futures are up 0.1% [1] - The Nasdaq Composite dropped 2% the previous day, with Nvidia and Palantir Technologies among the biggest fallers, the latter sliding 9% despite beating earnings expectations [2] - The S&P lost 1.2%, the Dow fell 0.5%, and the Russell 2000 gave back 1.8% [2] AI Sector Performance - AI-related stocks posted losses due to concerns over stretched valuations, with the Nasdaq 100 down 3.5% from recent highs and the Russell 2000 down 4.6% from its record levels [3] - Sentiment towards AI stocks, particularly Palantir and Nvidia, was negatively impacted by Michael Burry's large short positions on both companies [5] Investor Sentiment - Investors initially struggled to identify a catalyst for the selloff, which was ultimately attributed to Palantir's stretched market valuation [4] - Recent market chatter has focused on the potential for an AI bubble, with warnings from CEOs of Goldman Sachs and Morgan Stanley about possible 10-20% corrections in equity markets over the next 12-24 months [7] Earnings and Economic Data - Advanced Micro Devices (AMD) shares fell 1.9% in premarket trading despite beating earnings and revenue expectations and providing strong fourth-quarter guidance [6] - The ongoing US government shutdown has led to the postponement or cancellation of key data releases, including the non-farm payrolls report [6] - Private macro data releases for the day include ADP payrolls and ISM services PMI, along with earnings reports from McDonald's, Qualcomm, Arm, and DoorDash [8]

Market Overview - The S&P 500 is currently only 2% below record highs, indicating a strong market performance recently [1] - The S&P 500 has risen 15% year-to-date, with November historically being a strong month for the market [2] Concentration Risk - The S&P 500 is heavily concentrated, with 40% of its value derived from the top 10 companies, raising concerns about concentration risk [2] - Small-cap stocks have shown weakness recently, while the equal-weight S&P 500 index is lagging behind [4] AI and Market Dynamics - There are concerns regarding the sustainability of the AI sector's growth, with potential pullbacks in AI infrastructure spending affecting market performance [3] - The overall market is being led by a few key names, which may lead to profit-taking as valuations become elevated [5][10] AMD Performance - AMD reported strong earnings, beating EPS expectations of $1.20 with $1.17 and raising revenue guidance to a midpoint of $9.6 billion [7] - The gaming division generated $1.3 billion, exceeding expectations, while the data center revenue increased over 22% to $4.3 billion [9] - Despite positive results, concerns about margins not meeting expectations and elevated valuations may lead to profit-taking [8][10] Analyst Sentiment on AMD - Analysts have raised their price targets for AMD, with Rosenblatt increasing it to $300 and Stifel raising it to $280, indicating continued confidence in the stock [11] AET Performance - AET is under pressure due to lighter-than-expected guidance despite a 40% increase in stock price this year [12] - Earnings rose 25% to $0.75, and revenue climbed 27% to $2.308 billion, but the guidance for Q4 revenue is in line with consensus, which may be a concern [13][14]

[Music] Hello and welcome to Morning Brief Market Sunrise. I'm Raman Carmali live from Yahoo Finance Studios in London. It's Wednesday, 5th November.Coming up on the show, global stocks continue to slide after Wall Street's tech selloff. The current government shutdown is now the longest on record. And New York has a new mayor.>> This is not only how we stop Trump, it's how we stop the next one. So, Donald Trump, since I know you're watching, I have four words for you. Turn the volume up.[Music] Well, the f ...

[Music] Hello and welcome to Morning Brief Market Sunrise. I'm Raman Carmali live from Yahoo Finance Studios in London. It's Wednesday, 5th November.Coming up on the show, global stocks continue to slide after Wall Street's tech selloff. The current government shutdown is now the longest on record. And New York has a new mayor.>> This is not only how we stop Trump, it's how we stop the next one. So, Donald Trump, since I know you're watching, I have four words for you. Turn the volume up.[Music] Well, the f ...

Core Viewpoint - The iShares Semiconductor ETF (SOXX) and the VanEck Semiconductor ETF (SMH) experienced a significant decline, losing over $500 billion in value due to disappointing earnings from major companies in the semiconductor sector [1] Group 1: ETF Performance - The iShares Semiconductor ETF (SOXX) and the VanEck Semiconductor ETF (SMH) faced a harsh reversal this week [1] - Major companies within these ETFs contributed to the overall loss of over $500 billion in market value [1] Group 2: Earnings Impact - Key earnings reports from top semiconductor companies were pivotal in triggering the decline [1] - The negative earnings results led to a substantial decrease in investor confidence in the semiconductor sector [1]

On the trade front, China’s Customs Tariff Commission of the State Council announced on Wednesday that it will extend the suspension of a 24% tariff on some U.S. goods for another year while keeping a 10% duty in place, as part of the trade truce agreed at last month’s Trump-Xi summit. The commission also stated that it would lift tariffs of up to 15% on certain U.S. agricultural products. In addition, China will remove export controls against 15 U.S. entities and extend the suspension of such measures for ...

Key Points Nvidia sailed past other large stocks to hit $5 trillion in value last week. The 10 largest stocks on the market make up about 30% of the S&P 500. It's important to have a diversified portfolio to mitigate potential risk. 10 stocks we like better than Nvidia › After years of quiet, solid gains, Nvidia (NASDAQ: NVDA) stock has had a breathless ascent over the three years, climbing nearly 1,400%. It flew past Apple and Microsoft to become the most valuable company in the world, reaching ...

Group 1 - The stock of Palantir has experienced a significant increase of approximately 18% over the previous eight trading days before the earnings report, but has since been sold off despite good earnings and guidance [1] - Comparisons are being made between the current AI stock situation and the internet bubble of the late 1990s, suggesting that corrections in the market could be a healthy development [2][4] - Historical context indicates that corrections, such as a nearly 19% drop in 1998, are not unusual and may occur as the AI market continues to inflate [3] Group 2 - Prominent bank CEOs, including those from Goldman Sachs and Morgan Stanley, are warning about a potential bubble in the AI sector [4] - There are references to past financial crises, with some analysts drawing parallels to the 2007-2008 financial crisis related to the real estate market, indicating a cautious outlook on AI investments [6] - The current economic environment is characterized as a "jobless AI boom," where major tech companies are cutting jobs while still reporting strong profits, leading to concerns about economic bifurcation [8][9]