AI earnings could start to fall short of expectations, undermining both equity prices and the capital expenditure boom, economists at Capital Economics say in a research note. The economists think equity prices may have a bit further to rise in the near term but will eventually pull back, with the S&P 500 estimated to fall to 6500 by end-2027. AI demand may continue to grow, but at a slower pace than expected, as firms likely underestimate the barriers to AI adoption, CE says. Meanwhile, AI-related revenue will likely be weighed by a decline in prices driven by increased competition and innovation. AI capital spending could slow down as a result, as hyperscalers prioritize projects with clearer near-term monetization, CE adds. (sherry.qin@wsj.com)
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AI Earnings Could Start to Fall Short of Expectations — Market Talk
AI earnings could start to fall short of expectations, undermining both equity prices and the capital expenditure boom, economists at Capital Economics say in a research note. The economists think equity prices may have a bit further to rise in the near term but will eventually pull back, with the…