{"id":139994,"date":"2025-10-23T07:13:18","date_gmt":"2025-10-23T07:13:18","guid":{"rendered":"https:\/\/www.europesays.com\/ie\/139994\/"},"modified":"2025-10-23T07:13:18","modified_gmt":"2025-10-23T07:13:18","slug":"why-is-the-stock-market-doing-so-well-thank-ai-hype","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/ie\/139994\/","title":{"rendered":"Why is the stock market doing so well? Thank AI hype"},"content":{"rendered":"

Despite uncertainty over trade policy, a government shutdown, and signals that the labor market is cooling, U.S. stock indices have hit record highs this month, largely driven by investment in artificial intelligence<\/a>.\u00a0<\/p>\n

The biggest companies in the S&P 500, most of which have connections to AI, account for a disproportionate amount of the gains. Chipmaker Nvidia alone was responsible for around a quarter of the S&P 500\u2019s gains<\/a> in the first half of 2025, according to the New York Times.<\/p>\n

Ronnie Sadka, a finance professor at Boston College, said investment is flowing into all parts of the AI supply chain: the companies making the technology itself, data centers, raw material, and companies hoping to become end users of new AI technology.\u00a0<\/p>\n

Economists at JP Morgan have calculated<\/a> that AI investments contributed as much as 1.1% to overall U.S. gross domestic product growth in the first half of 2025 \u2014 even more than consumer spending.<\/p>\n

But there are a lot of unknowns about how those investments will pan out. <\/p>\n

\u201cI do think that people are also sounding some alarm bells about what AI can do and what it cannot do,\u201d said Sadka. \u201cThe market is still trying to figure that out.\u201d<\/p>\n

Both Open AI CEO Sam Altman<\/a> and a partner at Sequoia Capital<\/a>, which is heavily invested in AI, have suggested that the AI market could be in \u201ca bubble.\u201d<\/p>\n

\u201cI keep thinking of the (cartoon) where the guy goes off the cliff and he doesn’t fall until he looks down?\u201d said Gary Marcus, a machine learning researcher, NYU psychology professor emeritus, and a longtime skeptic<\/a> of AI\u2019s economic promise. \u201cWe are over the cliff with AI valuations,\u201d he said.\u00a0<\/p>\n

But even if the AI bubble bursts, a lot of money has already been made. Construction workers hired to build data centers, concrete poured, and cloud infrastructure purchased.\u00a0<\/p>\n

\u201cNow what we’re seeing is big cloud companies \u2014 Google, Microsoft, Amazon \u2014 investing in businesses going downstream<\/a> and then Open AI buying Nvidia chips, and Nvidia investing in Open AI, and it seems to be a little bit circular,\u201d said David Gray Widder, a professor at University of Texas at Austin\u2019s School of Information.<\/p>\n

He compared cloud providers to companies selling picks and shovels in a gold rush. \u201cIf AI turns out to be a bubble that pops or deflates, they’ve still made bank in the process,\u201d he said.\u00a0<\/p>\n

Given the scale and scope of AI investment in the U.S. economy, an AI bust could have widespread implications. Many Americans, intentionally or unintentionally, are invested in AI companies through pension funds and other accounts.\u00a0<\/p>\n

\u201cI will not be surprised to see six months or a year from now if people start saying it\u2019s too big to fail,\u201d said Marcus. \u00a0<\/p>\n

Do you have questions or personal stories to share about the economic implications of AI? <\/strong>Talk to us.<\/a><\/strong><\/p>\n

Correction (Oct. 22, 2025): A previous version of this story misspelled\u00a0David Gray Widder\u2019s name.<\/p>\n

Related Topics<\/p>\n","protected":false},"excerpt":{"rendered":"Despite uncertainty over trade policy, a government shutdown, and signals that the labor market is cooling, U.S. stock…\n","protected":false},"author":2,"featured_media":139995,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[261],"tags":[291,289,290,18,19,3442,17,292,1746,82935,64980,82],"class_list":{"0":"post-139994","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-artificial-intelligence","8":"tag-ai","9":"tag-artificial-intelligence","10":"tag-artificialintelligence","11":"tag-eire","12":"tag-ie","13":"tag-investing","14":"tag-ireland","15":"tag-nvidia","16":"tag-sp-500","17":"tag-speculative-bubbles","18":"tag-tech-bubble","19":"tag-technology"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@ie\/115422245841729363","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/posts\/139994","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/comments?post=139994"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/posts\/139994\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/media\/139995"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/media?parent=139994"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/categories?post=139994"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/tags?post=139994"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}