Artificial intelligence single-handly boosted the economy in 2025. AI stocks including Google, Nvidia, and CoreWeave were just a few stocks that ended up booming in 2025 due to AI. As 2026 comes around people are looking for the next stock to make them rich and the Deutsche Bank warns the public that the AI honeymoon will be coming to an end in.
A big reason why is due to the fact that AI has not proved to be effectivly cheaper than human workers in many work settings. This is leading to a lack of ROI and cause stockholders to be cautious where they are putting their money. It is still very possible that AI will take over some jobs in the future but the rapid change that was expected has not happened yet leading people to believe it still needs some time.
Next, AI data centers are already at capacity and some companies are scrambling just to find the money to support spending that is over 15 billion. Investors are also seeing the lack of infastutcure to support the growth of AI currently which could send some companies back to square one.
Finally, if a pullback of investment in AI occurs some analysts warn that it could trigger financial market correction that would drop global growth. If this happens it opens that door for competitors like China to get ahead of the United States in the AI race which would prove detrimental to the U.S. in the future.
I am curious if this will force companies to focus less on the hype of AI and more on practical and sustainable AI that creates value over time.
ReplyDeleteIt is interesting to see the decrease interest about AI, I will be curious to see if people will continue to be cautious about AI.
ReplyDeleteI've never been a fun of AI. I don't think it's good for us, and I understand it has some benefits, but the costs far outweigh them in my opinion. I think it'll be interesting in the future to see the difference between how AI is talked about and how it's actually used.
ReplyDeleteIt's really interesting that you mention that AI is not cheaper than labor. I think that AI is an amazing innovation that will help increase productivity but there is the fear that it will decrease the job market. I think that the fact that it is not cost effective yet is very good news. That gives the economy time to adapt the work force and jobs to AI as it becomes cheaper and more affordable. Hopefully this will reduce the risk of job loss that many have fear will be the result of AI.
ReplyDeleteIf the "AI Honeymoon" is over it will be interesting to see in what way that occurs. A major decrease in AI use and investment would greatly hurt the economy after it's had such fast growth. On the other hand, maybe it would be possible for a subtle decrease in AI usage that would not have as immediate of an impact on the overall economy.
ReplyDeleteI’m really curious to see whether, given that AI has not yet proven to be more cost-effective than human workers in many cases, we’ll start to see signs of an AI bubble this year. Could declining demand be enough to trigger a broader downturn or even a crash in the AI market?
ReplyDeleteIt makes sense that AI isn’t performing as well as some expected. Integrating AI into businesses has a steep learning curve and requires substantial infrastructure and investment. Over time, AI could become a steady sector to invest in, but future gains are likely to be incremental rather than dramatic, since the technology and market are already maturing.
ReplyDeleteThis is a strong take on the current state of AI. I like how you point out that while AI has been developing quickly, expectations may be set higher than the actual results. These challenges explain why investors are being more cautious while still leaving potential for AI's long-term growth.
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