Goldman Sachs warned AI spending is increasingly debt-financed, slightly weakening corporate credit quality. The S&P 500 set a new all-time high driven in part by AI spending from Big Tech. Nvidia, Palantir, and Amazon rose yesterday.
The S&P 500 rose to a new all-time high yesterday, up slightly to hit 6,715. AI stocks led the way, again, with Palantir up 1.1%, Nvidia rising 0.91%, and Amazon climbing by 0.81%.
In the absence of macro jobs data, a result of the U.S. government shutdown, traders are piling into AI stocks, ING told clients this morning: “Financial market volatility is falling across the board, partly driven by the U.S. government shutdown and the delay to key data releases such as the September jobs data. Instead, investors remain transfixed by the AI-driven rally in megacap tech shares, which shows no signs of slowing.” S&P futures were up 0.12% this morning, premarket.
Stocks are benefiting from the massive amount of capital expenditure (capex) coming from companies that are investing heavily in AI. Wedbush’s Dan Ives told clients in a note this morning: “For now, AI is being driven by a handful of U.S. Big Tech players spending almost $350 billion on capex this year with now the cavalry coming as more enterprises and governments from around the world get into the AI spending game.
