Global markets are facing renewed pressure as investors question whether major artificial intelligence companies can generate sufficient returns to justify the enormous sums being invested in the technology’s infrastructure.
Developments across several markets this week have intensified concerns about AI spending, putting technology stocks under pressure as investors reassess valuations, financing costs and future profitability.
OpenAI reportedly told investors that its annualised revenue in September was close to $50 billion, below figures it had previously indicated, according to Reuters. In Australia, data centre operator Firmus abandoned plans for a $5 billion initial public offering, opting instead to pursue private fundraising.
In the United States, another major fundraising drive is expected, with SpaceX, Broadcom and Oracle reportedly preparing to raise billions of dollars to purchase advanced AI chips.
Morgan Stanley estimates that AI infrastructure will require $1.5 trillion in external financing by 2028. These projected funding needs come as interest rates rise across several economies amid inflationary pressures linked to higher energy prices.
Rising borrowing costs are making it more expensive to finance data centres and other AI facilities, particularly as investors may have to wait years before these investments generate substantial returns. Investors are also seeking clearer evidence of future demand, including the customers and cash flows expected to justify the spending.
Public concerns about artificial intelligence have also grown in recent months, alongside unease over the increasing influence of a relatively small group of individuals and companies developing the technology. Fears that AI could pose an existential threat to humanity have further fuelled debate about its rapid expansion.
Elsewhere, Brent crude futures remain above $100 per barrel as the conflict in the Middle East shows little sign of easing. Bond yields have also remained elevated following a prolonged global bond sell-off that has pushed borrowing costs to multi-decade highs, placing countries including France under significant pressure.
French borrowing costs came under renewed scrutiny on Thursday after euro zone finance ministers and the European Central Bank urged the country to approve a 2027 budget aimed at easing pressure on bond markets.
Key developments to watch on Friday include speeches by European Central Bank officials Piero Cipollone and Isabel Schnabel, Brazil’s September inflation figures and Canada’s September employment report.
Goodness Anunobi
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