New Delhi, September 26 (ANI): While Artificial intelligence (AI) spending is driving one of the most aggressive bull runs in US markets, global borkerage Jefferies has cautioned investors about growing signs of speculative excess even as gold and Chinese tech shares surge.
In its latest GREED & Fear report, Jefferies observed that the US equity rally propelled largely by AI-related capital expenditure and passive inflows has added nearly $15 trillion to the S&P 500’s market value since April, an amount equal to half of America’s GDP. The frenzy, however, comes amid a nearly 10 per cent fall in the U.S. dollar index this year, its weakest performance since 2017.
The report cited the euphoric reaction to Oracle’s quarterly earnings as a clear indicator of mania. Oracle’s stock soared almost 40 per cent in a single day earlier this month after disclosing a five-year, $300 billion deal with OpenAI. Nvidia soon followed, pledging up to $100 billion to support OpenAI’s data center buildout. Jefferies likened this cycle of vendor financing to the early-2000s tech bubble, warning that the model could unravel first in GPU-rental businesses such as CoreWeave.
Meanwhile, the Federal Reserve’s policy easing continues to fuel bullish sentiment, though new Fed Governor Stephen Miran’s reference to a “third mandate” of moderating long-term rates hinted at possible yield curve control–an outcome Jefferies said would weaken the dollar and boost gold.
Beyond Wall Street, China’s AI-driven rally has gained momentum, supported by mainland inflows through Stock Connect. The Hang Seng Tech Index has jumped nearly 43 per cent this year, far outpacing the Nasdaq’s 16.5 per cent rise. Alibaba, dubbed China’s “AI engine,” has seen its stock climb 109 per cent year-to-date, while Tencent is up 56 per cent.
Jefferies noted that Western investors, many of whom had previously branded China “uninvestable,” are now reassessing their stance after witnessing the mainland’s rapid advances in semiconductors, robotics, and clean energy. President Xi Jinping is also expected to meet U.S. President Donald Trump at the APEC Summit in Korea next month, potentially paving the way for a trade thaw that could draw global money back to Chinese equities.
In Hong Kong, signs of stabilisation are emerging. Retail sales ticked up modestly, IPO fundraising has more than doubled from last year, and exchange volumes have surged. However, property markets remain under strain, with office prices down 49 per cent from their 2018 peak and retail properties down 41 per cent. Residential housing, by contrast, shows early signs of bottoming as rents rise and supply tightens.
“Markets are more reflexive than ever in the AI era, with retail investors buying stocks recommended by their chatbots,” Jefferies warned, adding that the sustainability of America’s AI capex boom will ultimately determine whether the rally endures–or unravels. (ANI)
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