Is the 'gold rush' into AI spending sustainable for markets?

Artificial intelligence has been dominating headlines this week as Nvidia (NVDA) CEO Jensen Huang unveils the developer's latest innovations and partnerships at the 2025 GTC (GPU Technology Conference), and Microsoft's (MSFT) stake in OpenAI (OPAI.PVT) climbs to $135 billion. This all comes ahead of Big Tech earnings reported by industry giants this week, like Microsoft, Meta Platforms (META), Alphabet (GOOGL, GOOG), Amazon (AMZN), and Apple (AAPL).

Interactive Brokers Chief Strategist Steve Sosnick speaks with Josh Lipton about the environment that tech giants have created by their broadening AI capex spending.

Also catch Steve Sosnick explain why he fears "the lack of fear" in markets the most.

To watch more expert insights and analysis on the latest market action, check out more Market Domination.

Video Transcript

00:01 Speaker A

You mentioned those big tech earnings on deck. Just tying back to AI, do those big tech names, Steve, when they report, do they have to say yes, AI capex is going to keep increasing from here? And what if they don't?

00:15 Steve

Well, them there's one of those scenarios. That's the thing is is it's baked in that the AI spend is going to continue um more or less ad infinitum. Meanwhile, we heard, you know, meta basically cutting a lot of people in AI. Uh maybe they've maybe they've spent a little too much. Now, you can argue that the whole point of of AI development is to allow is to allow more efficiency which translates into people losing their jobs. But um but that may be part of it. Amazon, again, with their cuts, maybe that's part of it as well. Or, you know, is it just a fig leaf for companies saying we overhired and, you know, we're going to use this as as our as our excuse not to as our excuse to say that AI is is working on our behalf. But right now the whole market, the whole ecosystem is based on the fact that money will continue to be spent at an increasing pace on artificial intelligence. and at some point you have to wonder, can that is that is that sustainable? And I point to the example, I I know I know the prior guest did not see echoes of of the internet bubble, but I'm thinking to a certain extent that we're we're there are echoes and, you know, history doesn't repeat but it often rhymes of the uh bandwidth build out that we saw in the internet era where we, let me stipulate, we needed the bandwidth and there were companies very happy to build it. and some of those huge winners who were building the the the infrastructure that built the internet are such illustrious names as Lucent, Global Crossing, Northern Telecom, Worldcom, Enron, sense a pattern here? So, the problem is, which is not to say that any of these big companies are frauds or or or doomed to to go bust. That's not Nokia was one of them as well, which which I've had in my portfolio for years. I'm like, oh my gosh, this dead money stock is helping me out, but it but it's by accident. And so, um, you know, I do have to say that there's there, you know, that's the caution there is that, you know, this this gold rush, um, in into AI, you know, it's tough to sustain the enthusiasm and the, um, and the high levels and the high levels of profitability that are and growth that are priced into these stocks.

01:54 Speaker A

Steve, always great to see you, especially on set. Thank you so much.

01:57 Steve

Thank you so much.

View Comments