High investments and Capital Expenditures that were seen as only positive are now being targeted by profit-takers and short-sellers, as investors question how long it will take to materialize into profits.
This comes amid times when OpenAI, the founder of ChatGPT, is under heavy scrutiny for its fast-paced cash burning, and it gets even more damaging when OpenAI is pretty much the firm that started this entire AI trend to begin with.
In other words, AI won’t just allow Markets to shoot higher eternally.
Some firms and industries will face pain ahead as the global economy prepares for an existential restructuring.
If and when large numbers of firms see their activities stolen by revolutionary technology, it could not only lead to massive layoffs and reduced consumption but also trigger cascades of entire industries unable to function correctly, resulting in lower profits and, in turn, an inability to repay their heavy debt levels.
This could quickly turn into a global liquidity and credit crisis – but for now, it’s mostly fear: fear of creative destruction, which is for now still lifting global earnings to all-time highs.
To put things into perspective, the Dow Jones still reached a 50,000 all-time high just last week, and Nasdaq is still well below 10% to its record, so for now, it’s only a turn in narrative – With Stock Indexes maintaining a broadly rangebound picture, it’s essential to take a step back and not get too afraid too fast.