Cracks are beginning to show in the stock market as doubts about AI investments grow

Just one week after hitting fresh all-time highs, U.S. stocks are showing signs of strain as investors begin to fret about returns on the trillions of dollars that have been put into AI. For U.S. consumers, it could mean a shakier economy moving forward. After trading closed Thursday, the S&P 500 was off 1% from its week-ago record, while the tech-heavy Nasdaq had fallen more than 3% below its peak last week. Driving the declines: Quarterly revenue growth at Anthropic has slowed, the Financial Times reported Wednesday. The AI giant is expected to be worth more than $1 trillion when it goes public, and at nearly $17 billion, its revenue is still massive and the company said it is profitable.

There are also rising concerns about whether China-based memory technology companies could undermine, or even overtake, their Western rivals. And even though the AI data center buildout has created a global shortage of processing chips, there are fears that Chinese mass production of memory chips could flood the market with an oversupply. Meanwhile, investors have begun selling off the bonds backing some data centers, primarily over fears that AI revenues won’t be sufficient to cover the massive sums that have been borrowed to finance the building of the centers. On Thursday, economist Ed Yardeni, a widely respected market commentator, lowered