Yusuf Mehdi, executive vice president and consumer chief marketing officer at Microsoft, speaks at a company briefing in Redmond, Wash., on May 20, 2024. Microsoft unveiled a new category of PC that features generative artificial intelligence tools built into Windows, the company’s world-leading operating system.
Jason Redmond | AFP | Getty Images
The euphoria around artificial intelligence is colliding with the limits of reality, and cracks are emerging.
Last night, tech giants like AMD smashed expectations on AI chip demand, and Palantir reported another quarter of strong growth. Yet the Nasdaq fell, revealing Wall Street’s playlist is stuck on one track: AI mania.
Palantir — the poster child of that obsession — plunged nearly 8% despite its blowout quarter, while Oracle dropped almost 4%. Even AI darlings Nvidia and Amazon pulled back.
The message? It’s AI or nothing — and that tunnel vision is flashing warning signs.
Some CEOs are warning of a market correction, others of an inevitable mismatch between revenues and the massive capital expenditure needed to power AI. One CEO even told CNBC that stocks are in a correction, even if the S&P 500 hasn’t reflected it.
Perhaps it’s time investors step off the hype train and look at the broader market — even the strongest empires fall when they start believing their own legend.
What you need to know today
AMD beats estimates. AMD that exceeded Wall Street expectations but provided margin guidance in line with estimates. Both revenue and net income exceeded expectations. Despite this, the stock slipped in extended trading.
IBM layoffs. The company told CNBC Tuesday that it will lay off “a low single-digit percentage of our global workforce,” adding that IBM anticipates that its U.S. employment will remain flat year over year. IBM employed 270,000 people at the end of 2024, and a 1% cut to headcount would represent the loss of 2,700 jobs.
Musk’s trillion-dollar pay package opposed. Norway’s $2 trillion sovereign wealth fund said it will vote against Elon Musk’s trillion-dollar pay package at Tesla’s annual shareholder meeting this week, rebelling against management guidance and threats from Musk to step down if the deal is rejected.
Tech drags U.S. markets. All three major U.S. indexes fell on Tuesday, as tech stocks lost ground. The tech-heavy Nasdaq Composite plunged more than 2%, while the S&P500 declined 1.17% and the Dow Jones Industrial Average dipped 0.53%.
[PRO] Stocks in correction? CEO of Ritholtz Wealth Management Josh Brown said Tuesday the stock market is going through a correction, even if the indexes have yet to reflect it.
And finally…
President and CEO of Saudi’s Aramco, Amin H. Nasser, speaks during the Future Investment Initiative (FII) in Riyadh, Saudi Arabia October 29, 2024.
Hamad I Mohammed | Reuters
Aramco CEO says Saudi Arabia’s cheap energy will turn kingdom into a global AI data center leader
Saudi Arabia will capitalize on its abundant supply of cheap natural gas and renewables to transform the kingdom into a global leader in artificial intelligence, Aramco CEO Amin Nasser told CNBC in an interview.
Aramco, the world’s largest oil company, disclosed in late October that it plans acquire a significant minority stake in the new artificial intelligence company Humain. Saudi Arabia’s sovereign wealth fund, PIF, is the majority owner of Humain, which launched in May.
“Here, if you want renewable, you will find the lowest cost renewable,” Nasser said. “If you want gas, you will find the lowest cost gas. Energy is available and land is also available to build all these things.”
— Spencer Kimball