RT unusual_whales (@unusual_whales)Here is how the AI bubble is being created, per Bloomberg: https://t.co/rHlVKVpKgV ...

Market Overview - There is evidence of bubble-like behavior in the AI sector, characterized by speculative actions and aggressive pricing [1][2] - The US market is experiencing a two-speed economy, heavily reliant on AI capital expenditures, which could lead to vulnerability if there is a slowdown [6][12] Investment Opportunities - Europe and Japan are seen as attractive investment areas due to their cheap valuations and resilience against recession fears [3][4] - Value stocks in Europe, particularly in financials, industrials, and pharmaceuticals, are trading at significant discounts compared to US counterparts, presenting good return potential [5] AI Sector Dynamics - The AI ecosystem is increasingly dependent on debt financing rather than cash flow, raising concerns about sustainability [9][12] - Companies like Nvidia are investing heavily in non-profitable firms, which may indicate a shift in the capital structure of the tech industry [8][11] Capital Investment Trends - The tech industry is becoming more capital-intensive, which could challenge the historically high returns on capital that were previously maintained [15][16] - Innovative financing structures, such as special purpose vehicles for debt management, are emerging but may signal underlying risks [14]

We'll stick with the markets, bring in our next guest who's closely watching the risks around a potential AI bubble, bullish instead on opportunities across Europe and Japan. Joining us now is GMO co-head of asset allocation, Ben Inkler. You think there's a bubble happening in the US market, Ben.>> Uh, we're certainly seeing lots of evidence of bubble-like behavior in the AI space. We see the kind of circular uh revenue deals. we see a lot of very uh aggressive price behavior.So, I mean, is the whole thing ...

As interest rates come down, many investors will opt moving out of cash and into riskier assets. @edwardnh argues what they may not do is spend more, with these flows signaling the peak of the AI bubble. https://t.co/QXzrsZsZna ...

[Applause] Welcome to Yahoo Finance's flagship show, The Morning Brief. I'm Julie Hyman. Let's get to the three things you need to know today. First up, US stock futures rebounding this morning after the major averages closed in the red, halting seven consecutive days of gains for the S&P 500. But the gold rally, it continues to power higher. Spot gold hitting $4,000 an ounce for the first time ever. Billionaire investor Ray Dalio says he sees gold as more of a safe haven than the dollar. He compared its re ...

Market Overview - US stock futures are rebounding after the S&P 500 halted a seven-day winning streak, with all three major indices expected to open in the green [1][6] - Spot gold has reached $4,000 an ounce for the first time, with billionaire investor Ray Dalio viewing gold as a safer haven than the dollar [1][22] - The US dollar has weakened nearly 10% year-to-date, prompting investors to turn to alternative assets like gold and Bitcoin [1][6] Federal Reserve Insights - Investors are awaiting the release of Fed minutes, which may provide insights into the central bank's future rate path amid a government shutdown [1][6] - Fed officials are divided on the need for further rate cuts, with some advocating for caution due to rising inflation in durable goods and services [2][3] - The lack of new government data due to the shutdown is forcing the Fed to rely on private sector surveys for economic insights [2][3] Tesla Developments - Tesla has introduced cheaper versions of its Model Y and Model 3, with the Model Y starting under $40,000 and the Model 3 around $37,000 [6][7] - The introduction of these models aims to recoup sales lost from the EV tax credit, but concerns remain about whether consumers will accept higher prices for less equipped vehicles [8][9] AI Sector Activity - Nvidia is reportedly investing up to $2 billion in Elon Musk's AI startup XAI, which is raising $20 billion in a funding round [1][9] - The AI sector continues to show momentum, with Nvidia and AMD expected to see gains in pre-market trading [14][16] - Concerns about a potential bubble in the AI market are growing, as circular financing deals among top AI companies raise questions about sustainability [22][25] Trending Companies - Verizon has signed a deal with AS Space Mobile to provide cellular service from space, leading to a 14% increase in its shares [18] - Penguin Solutions has seen a sharp drop in shares after its sales guidance fell short of analyst estimates [19] - Jeffre disclosed exposure to First Brands Group, which recently filed for bankruptcy, revealing a total exposure of $161 million [21]

Core Insights - The article discusses the significant investments and circular deals between Nvidia and OpenAI, raising concerns about the sustainability of the AI boom and potential risks of an AI bubble [12][10][6] Investment Activities - Nvidia has signed 50 deals by September 2023, compared to 52 in 2024, indicating a rapid pace of investment in AI infrastructure [9] - OpenAI has made substantial investments, including a $300 billion deal with Oracle for data centers and a $2 billion equity investment in Elon Musk's xAI as part of a $20 billion round [3][12] - CoreWeave, a neocloud company, has received investments from both Nvidia and OpenAI, with Nvidia holding a 7% stake and a $6.3 billion backstop deal for cloud services [4][12] Market Dynamics - The investments are seen as necessary to meet the surging demand for AI technology, with proponents arguing that they represent the new normal rather than a bubble [10][13] - Analysts express concerns that circular financing, where money circulates between companies, may artificially inflate valuations and create risks if demand drops or competition increases [6][11] Company Performance - OpenAI, valued at $500 billion, is yet to turn a profit while planning to invest trillions in AI infrastructure [8][13] - Nvidia, as the dominant player in AI chips, continues to invest heavily, with its deals propping up the valuations of involved parties [6][9] Future Outlook - Executives from both companies express confidence in the long-term viability of their investments, despite concerns about circular financing [10][13] - The potential for a drop in demand or competition from cheaper alternatives poses risks to the current AI investment landscape [11][12]

Core Insights - The article discusses the significant investments and deals between Nvidia and OpenAI, highlighting the potential for a circular financing model that may inflate valuations without creating actual value [9][4][5] - There are concerns about the sustainability of these investments, with analysts drawing parallels to the dotcom bubble, suggesting that a downturn in demand could have widespread implications for the capital markets and economy [9][8][5] Investment Activities - Nvidia has committed to investing $100 billion in OpenAI for 10 gigawatts of data center capacity over the next decade, which will utilize millions of Nvidia GPUs [3] - OpenAI has signed a $300 billion deal with Oracle to establish five data centers in the US, which will also incorporate Nvidia chips [3] - Nvidia's recent $2 billion equity investment in Elon Musk's xAI is part of a larger $20 billion funding round structured through a special purpose vehicle [3][9] Market Dynamics - Both Nvidia and OpenAI are leveraging the current demand for AI technology to enhance their valuations, with Nvidia signing 50 deals by September 2023 [6][10] - OpenAI, valued at $500 billion, is yet to turn a profit while planning substantial investments in AI infrastructure, relying on a mix of venture capital, debt, and partnerships [10][5] - The investments in AI infrastructure are characterized as the new normal to meet increasing user demand, according to industry leaders [10][7] Concerns and Criticism - Analysts express worries about the circular nature of the financing arrangements, which may not lead to genuine growth and could result in inflated valuations [5][9] - Historical comparisons are made to the late 1990s, where similar circular deals were prevalent, raising concerns about the current AI landscape [5][9] - There is a fear that a decline in demand or competition from cheaper alternatives could trigger a collapse in the AI market [8][10]

Company News - Tesla experienced a significant decline, leading losses among the "Mag Seven" tech giants, with a drop of 4.45%, while Amazon was the only company in the group that did not lose ground on that day [2] - AST SpaceMobile Inc saw its shares surge by 13% after Verizon signed a deal for a cellular service from space [9] Industry Insights - Goldman Sachs noted that high valuations in the AI sector are becoming stretched but are not yet at levels consistent with historical bubbles, indicating that the current technology rally is driven by fundamental growth rather than irrational speculation [6] - The Bank of England expressed concerns that the risk of a sharp market correction has increased globally, warning that a loss of credibility by the US Federal Reserve could lead to a significant repricing of US dollar assets [8]

Core Insights - The current landscape of artificial intelligence (AI) is characterized by significant investments and speculation, leading to discussions about whether it is an AI bubble or boom [1][4][6]. Investment and Partnerships - OpenAI has entered a multiyear, multibillion-dollar agreement with AMD for next-generation GPUs, with the option to acquire up to 10% of AMD [2]. - Nvidia is investing $100 billion into OpenAI, which is also a key customer for Nvidia's products [2]. - Major tech companies like Amazon, Google, Meta, and Microsoft are also heavily investing in AI infrastructure, with Oracle committing $40 billion for Nvidia chips to support OpenAI's Project Stargate [3]. Market Valuations - Nvidia's market capitalization exceeds $4.5 trillion, while OpenAI is valued at $500 billion, surpassing SpaceX's valuation of $400 billion [6]. - Microsoft and Google's valuations have crossed the $3 trillion mark, with Microsoft approaching $4 trillion [7]. Market Sentiment and Future Outlook - Concerns about an AI bubble are rising as stock prices and corporate valuations soar, reminiscent of the dot-com bubble [4][6]. - Despite fears, some experts believe there is substantial long-term demand for AI technologies, suggesting that investments in AI infrastructure will yield returns over time [5][6]. - Jeff Bezos has expressed that while the current excitement may lead to funding both good and bad ideas, some investments will ultimately pay off [7][8].