Analysis: As the AI Boom Rages, Investors Grow Wary of Potential Derailments

Driven by optimism towards AI, the U.S. equity market has hit all-time highs, with close to half of the $57 trillion S&P 500 market value attributed to the tech. But investors are increasingly cautious about risks that might spoil the AI party. Chief among them are concerns over the viability of enormous capital outlays by the tech titans, which need to deliver a definitive return on investment. Other red flags include possible energy shortages for powering data centers, declines in AI demand, and intricate financial relationships among AI firms that generate systemic risk. Though the long-term opportunity is enormous, the high expectations of the market make it susceptible to any disappointments.