Azeem Azhar

So let's get started.

Why does this question matter anyway?

Well, if you've watched the stock market this week, you will know exactly why.

The mood around the AI boom turned sour over the NASDAQ and the S&P 500.

There have been several days of red.

key stocks that have enjoyed incredible gains in the last couple of years and the last few months to an absolute pounding.

Amongst them, the hyperscalers, the cloud companies like Oracle and CoreWeave and Nebius, who are

in operation to serve up these AI models for companies like OpenAI and others, really, really in a sea of red.

And even the hardware companies like Vertiv, which makes cooling for data centers, having a really, really tough and torrid week.

In another part of the market, not the equity market, the bond market, we saw similar fear emerging.

The bond market tends to move slightly differently to the equity markets.

But a number of these companies in the AI space are dependent on corporate debt because you're having to raise a lot of money to build out these big data centers.

And so for one example, Oracle's corporate debt took a real hammering down 8% this week.

And the CDS, which is a kind of interesting technical financial instrument, it's the cost to ensure the debt of some of these companies spike.

It got increasingly more expensive.

And that's often a signal that bond investors are a bit nervous about the prospects of those firms.

Now,

In truth, the Nasdaq is still above its 50-day moving average, and this is often just the normal ups and downs, but perhaps it isn't.

Now, the real driver here are the fears that the revenues won't materialize rapidly enough to pay for the AI infrastructure, particularly so for these new firms moving into serving models like Corweave and Oracle.

Now, for revenues to materialize, we need to see people and companies spending more and more in the generative AI ecosystem.