AI trade actually cracking?

[Kieron]

BBC's piece on the recent tech share wobble is a good corrective to both the doom headlines and the buy the dip crowd, Google and Tesla both dropped sharply last week before recovering once they reaffirmed billions more in AI spending, and now Meta, Microsoft and Amazon reporting results this week gives investors a fresh chance to scrutinise the bet

Russ Mould from AJ Bell is quoted saying there is still healthy scepticism about whether these investments will ever generate a commensurate return, which is a polite way of saying nobody has actually proven the payoff yet despite hundreds of billions already committed

The line that stuck with me came from tech investor Eileen Burbidge, she says the AI bubble hasn't burst but it's letting out air, which feels like the most honest one sentence summary of where sentiment actually sits right now rather than either extreme

Part of what triggered the wobble was a reported manufacturing breakthrough from a Chinese company that could make the country more self sufficient in chip design and production, which rattled the assumption that Western chip supremacy was a safe long term bet

Meanwhile Apple, which has mostly sat out the AI arms race entirely, has seen its shares climb 21 percent over the past month and reclaimed the title of world's most valuable company from Nvidia, and London's FTSE 100, sometimes mockingly called the anti tech index, briefly touched a record high simply by virtue of not being tech heavy

The historical parallel to railways is the part worth sitting with longest, the technology transformed economies even as plenty of individual investors lost money along the way, and unlike rail tracks which last decades once built, data centres need frequent hardware refreshes just to stay competitive, which changes the entire economics of who actually profits over time

Some tech shares are plunging - what does that mean for the AI revolution?www.bbc.co.uk

[DeBruyne75]

Letting out air is such a better description than bubble bursting, feels much closer to what markets have actually been doing the past few weeks

[Amy_15]

Apple reclaiming most valuable company by basically not participating in the AI capex race is one of the more darkly funny outcomes of this whole cycle

[Gareth5]

The railway comparison undersells how brutal that era actually was for investors, most railway companies went bankrupt even though the technology itself absolutely did transform the economy

[QueueJump58]

That is sort of the point though, the technology succeeding and any specific investor making money on it are two completely separate questions, which is exactly the warning buried in this article

[Scott98]

Data centres needing constant hardware refreshes versus rail tracks lasting decades is the detail that actually worries me most long term, the depreciation schedule on all this AI capex looks brutal on paper

[Finley_19]

Genuinely curious how much of the FTSE's record high is really about strength versus just being a relative safe haven while tech wobbles, feels more like the latter

[Zenith Theo]

Both things can be true, relative safe haven flows plus genuine long run undervaluation of some FTSE names that got ignored during the AI mania