Artificial intelligence spending pressures markets

Global markets are following a mixed course, as political uncertainties brought about by the election process in the US and concerns about the financing of artificial intelligence investments overshadow optimism about diplomatic progress in the Middle East.

The election process in the USA, developments in the Middle East axis and continuing doubts about artificial intelligence spending continue to have an impact on asset prices. While investors question the sustainability of large investments made in the field of artificial intelligence, question marks remain regarding when these expenditures will contribute to the income and profitability of companies.

Accordingly, artificial intelligence and technology stocks came under selling pressure yesterday as company-based developments increased existing concerns.

After the US chip manufacturer Marvell Technology announced that it would acquire the optical network technologies company Lumentum with an enterprise value of approximately 115 billion dollars, entirely through share swap, Marvell's shares fell by 12.72 percent and Lumentum's shares fell by 18.59 percent.

Oracle's shares also lost 8.76 percent after the company announced that it plans to issue $10 billion in stocks and $10 billion in bonds to finance its artificial intelligence investments.

Analysts noted that concerns about the demand outlook in the semiconductor industry and question marks regarding the financing of high-amount capital expenditures, as well as the expectation of re-tightening in global interest rates, triggered the declines.

Following macroeconomic data indicating that inflationary pressures may continue in the USA last week, the manufacturing industry Purchasing Managers Index (PMI) data announced yesterday revealed that growth in the sector has accelerated. The Institute for Supply Management's (ISM) manufacturing industry PMI rose to 55.5 in October.

The fact that economic activity remains strong strengthens expectations that the US Federal Reserve (Fed) may adopt a more hawkish stance in monetary policy. According to the pricing in money markets, the probability that the Fed will increase interest rates in December has increased to 75 percent.

Source: TRT Haber Ekonomi RSS (Open Press / Translated Full Text)