Tech goliaths face ‘prisoner’s dilemma’ as investors turn wary on AI
QQQ•An investment executive said AI companies may struggle to slow spending without risking their competitive positions, as investors seek clearer evidence of returns. US indexes rose, oil prices fell more than 6%, and the 10-year Treasury yield was 4.88%.
1. AI spending dilemma
Companies face a “prisoner’s dilemma” over AI spending, said Alexander Lis, chief investment officer at Social Discovery Ventures: any company that independently announces a pullback could be punished by investors concerned that rivals will race ahead. Lis said investors are demanding clearer evidence of returns as monetary support for markets wanes, and that bond and equity markets may not continue providing capital on terms that make the buildout economically viable.
2. Markets higher
The three major US stock indexes rose, led by the Dow, while consumer discretionary led S&P 500 sector gainers and energy fell the most. Oil prices dropped more than 6%, gold rose, and the US 10-year Treasury yield was last down at 4.88%.
