Yusuf Mehdi, Microsoft’s executive vice president and consumer chief marketing officer, speaks at a company information session in Redmond, Washington, on May 20, 2024. Microsoft has announced a new category of PCs equipped with generative artificial intelligence tools built into Windows, the company’s world-leading operating system.
Jason Redmond | AFP | Getty Images
A rift is emerging as the euphoria surrounding artificial intelligence collides with the limits of reality.
Last night, tech giants like AMD shattered expectations for AI chip demand, with Palantir reporting another strong quarterly growth. But the Nasdaq fell, revealing that Wall Street’s playlist was stuck on one track: AI mania.
Palantir, the symbol of that obsession, fell nearly 8% despite a blowout quarter, and Oracle fell nearly 4%. Even AI darlings Nvidia and Amazon have pulled out.
What’s the message? It’s either AI or nothing, and its tunnel vision is flashing warning signs.
Some CEOs are warning of a market correction, and others are warning of an inevitable mismatch between profits and the huge capital investments needed to power AI. One CEO even told CNBC that stocks are in a correction, even if the S&P 500 doesn’t reflect it.
Perhaps it’s time for investors to get off the hype and look at the broader market. Even the most powerful empires fall apart when they start believing in their own legends.
What you need to know today
AMD exceeded expectations. AMD beat Wall Street expectations, but provided margin guidance in line with expectations. Both sales and net income exceeded expectations. Nevertheless, the stock fell in after-hours trading.
IBM layoffs. The company told CNBC on Tuesday it would lay off “a low-single-digit percentage of its global workforce,” adding that it expects U.S. employment to remain flat year over year. IBM employs 270,000 people at the end of 2024, and a 1% reduction in headcount would result in the loss of 2,700 jobs.
He opposed Musk’s multitrillion-dollar pay package. Norway’s $2 trillion sovereign wealth fund said it would vote against Elon Musk’s multitrillion-dollar salary package at Tesla Inc.’s annual general meeting this week, pushing back against Musk’s threat to resign if management guidance and a takeover proposal are rejected.
Technology is driving the US market. Tech stocks stalled on Tuesday, with all three major U.S. indexes falling. The Nasdaq Composite Index, which has a large proportion of tech stocks, fell more than 2%, the S&P 500 Index fell 1.17%, and the Dow Jones Industrial Average fell 0.53%.
(PRO) Stock market correction in progress? Josh Brown, CEO of Ritholtz Wealth Management, said Tuesday that the stock market is undergoing a correction, even if the indexes don’t reflect it yet.
And finally…
Amin H. Nasser, President and CEO of Aramco, Saudi Arabia, speaks at the Future Investment Initiative (FII) in Riyadh, Saudi Arabia, October 29, 2024.
Hamad Mohammed | Reuters
Aramco CEO says Saudi Arabia’s cheap energy will transform kingdom into global AI data center leader
Aramco CEO Amin Nasser said in an interview with CNBC that Saudi Arabia will use its abundant supplies of cheap natural gas and renewable energy to transform the kingdom into a world leader in artificial intelligence.
In late October, Aramco, the world’s largest oil company, announced plans to acquire a significant minority stake in emerging artificial intelligence company Humane. Saudi Arabia’s sovereign wealth fund PIF is the majority shareholder in Humane, which was established in May.
“Here, if you need renewable energy, you can find it at the lowest cost,” Nasser said. “If you want gas, you’ll find the cheapest gas. The energy is available, and the land is available to build all this.”
— Spencer Kimball
