AI Stocks Whipsaw As Costly Growth Model Raises New Doubts And Undercuts The Classic Fake It Until You Make It Cycle

Benzinga

The story covers rising investor skepticism toward AI companies whose business models lose money as they scale. Even major funding deals involving Nvidia and Microsoft failed to boost AI stocks, signaling growing caution in the market. Traders are now favoring companies with clearer near-term returns.

Transcript

00:00It's Benzinga, bringing Wall Street to Main Street.

00:02Silicon Valley's fake-it-until-you-make-it culture is hitting a wall as AI companies struggle with business models

00:07that lose more money with each new customer, according to the Wall Street Journal.

00:11Investors are growing cautious because AI services cost more to provide than customers pay.

00:16The circular cycle of subsidized growth is starting to strain confidence.

00:21Vinny and Microsoft pledged $15 million to Anthropic this week,

00:24which agreed to buy $30 billion in Microsoft computing capacity.

00:27The usual stock bump never materialized.

00:30Many of the strong earnings initially lifted AI stocks,

00:32only for the sector to reverse sharply by the afternoon

00:35as traders question whether infrastructure spending is making it and asking deeper issues.

00:39Markets are becoming more cautious about long-term AI bets

00:42and are shifting toward companies that can deliver near-term returns,

00:46leaving stocks like Alphabet relatively unaffected.

00:48For all things money, visit Benzinga.com.

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