Wall Street rethinks AI bets

The sell-off that followed the U.S. election exposed the fragility of Wall Street’s bets on an artificial intelligence boom and prompted investors to question whether massive spending can deliver the expected returns, amid rising infrastructure costs and hurdles related to energy and permitting. Barclays estimated that by 2027, about 80% of the data-center projects expected to go ahead would be in states governed by Democrats, compared with less than 30% today, while chipmakers’ valuations fell. Forecasts had pointed to technology companies’ earnings growing by 29% this year, then 19% in 2027 and 16% in 2028. Observers say the election did not create these vulnerabilities, but brought them into sharper focus, while some asset managers do not yet see a pullback in AI investment as inevitable.

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