AI Spending

Wall Street rebounded on Friday after early AI concerns, fueled by dovish signals from the Federal Reserve hinting at potential rate cuts. Home Depot and Eli Lilly saw significant gains, with Lilly achieving a $1 trillion market cap. Global factors, including Japan’s inflation and yen carry trade, added complexity. HSBC downgraded Palo Alto Networks despite solid performance, citing decelerating sales growth, yet CNBC maintains a buy rating due to the company’s “platformization” strategy and acquisition aptitude. Upcoming week’s economic data, including retail sales and CPI, will be pivotal.

Bitcoin fell below $95,000 amid a wider market pullback driven by AI spending concerns, mirroring a decline in tech stocks and highlighting growing interconnectivity. The sell-off, impacting crypto-linked stocks as well, reflects broader economic anxieties and deleveraging. Animoca Brands’ Yat Siu suggests institutional investors, unlike previous Bitcoin enthusiasts, may see this correction as a buying opportunity, potentially altering historical price cycle patterns and providing a buffer against downturns. They are less likely to expect a drop to $60,000.

Meta Platforms’ stock plummeted despite a strong earnings report, triggered by investor apprehension over escalating AI spending. The company revised its 2025 capital expenditure forecast upwards to $70-72 billion, signaling an intensified pursuit of advanced AI technologies. CEO Zuckerberg defended the aggressive investment, emphasizing early returns and Meta’s ambition to build capacity for “superintelligence.” The increased spending reflects a broader industry trend, with Alphabet and Microsoft also increasing their capital expenditure projections. Meta invested heavily in AI startup Scale AI, and secured new cloud computing agreements. A $15.93 billion tax charge also impacted earnings.