Skepticism surrounding the artificial intelligence investment cycle is deepening across global equity markets, driven by a combination of rising Treasury yields and intensifying competition from Chinese technology firms.
Market strategists are increasingly warning that the current rally in AI-related stocks is becoming fragile, characterized by what some describe as circular capital flows rather than fundamental earnings growth.
The shift in sentiment comes as investors grapple with the sustainability of massive capital expenditures in the sector.
A prominent research firm recently issued a bearish warning on US equities, highlighting the confluence of higher borrowing costs and growing doubts about the return on investment for AI infrastructure.
This marks a notable departure from the earlier phase of the cycle, where optimism was largely unchallenged.
Compounding these concerns is the emergence of Chinese competitors, which is reshaping the competitive landscape for global tech giants.