Archive · 5 Aug 2025
Market Experts: AI Spending, Not Tariffs, Biggest Stock Risk
Imagine a lot of money is being invested in artificial intelligence (AI), like computers that can think.
Some experts worry this spending might be too much, like the tech boom of the 90s.
They're concerned that if AI doesn't deliver the expected results, or if companies spend too much, the stock market could suffer.
Nvidia, a company that makes chips used in AI, is a big part of this.
If Nvidia's value drops, it could hurt investors who have made money during the AI boom.
The experts also see hints of trouble in how companies that make equipment for computer chips are doing, and from trade policies.
Market analysts suggest AI spending poses a significant risk to the stock market.
Nvidia, a major beneficiary of AI investment, has experienced substantial market value losses in the past.
Concerns arise from potential disappointments in AI's productivity gains and overspending.
Warnings from semiconductor equipment manufacturers hint at weakening demand and tariff impacts.
A pullback in valuations could trigger a negative wealth effect if AI investment falters.
- Who
- Louis Gave, head of Gavekal, and investors.
- What
- A market analyst suggests that overspending in AI is a bigger risk to the stock market than tariffs.
- When
- Since the release of ChatGPT in 2022.
- Where
- U.S. market.
- Why
- Because of over-reliance on AI spending and potential setbacks.
Positive Outlook
Negative Outlook
Market Performance
Positive Outlook
The market continues to forge higher.
Negative Outlook
There are signs of weakening demand.
- AI Spending
- About 11% of GDP
- U.S. Market Cap Expansion since ChatGPT (2022)
- $23 trillion
- Nvidia's Market Cap
- $4.2 trillion
- Nvidia market value losses
- Seven times since going public in 2000.
- Company Issuing Warnings
- Tokyo Electron and ASML