AI Spending Concerns Weigh on Tech Giants
Investors are expressing concerns over the efficacy of AI spending as tech giants face challenges and decelerating profit growth.
Key Points:
* AI threat from DeepSeek has eroded Nvidia's value by $500 billion.
* Alphabet's disappointing earnings raised questions about its capital expenditure plans.
* "Magnificent Seven" tech firms (including Google, Amazon, and Nvidia) have driven S&P 500 earnings but face valuation risks due to high valuations and slowing profit growth.
* The gap between the Magnificent Seven's CapEx growth and the rest of the S&P 500 is widening, raising concerns.
* Alphabet plans to invest $75 billion in capital expenditures in 2025, exceeding analyst expectations.
* Trade tensions, geopolitical concerns, and the emergence of DeepSeek add pressure on the tech giants.
* Investors are seeking stronger profit growth from non-Magnificent Seven companies.