U.S. markets had their worst day since Oct. 10. That marks a sharp reversal for the Dow Jones Industrial Average, which shed 1.65% to settle at 47,457.22, a day after it closed above 48,000 for the first time. Meanwhile, the S&P 500 lost 1.66% and the Nasdaq Composite tumbled 2.29%.

The slump in stocks can partly be traced to a turnaround in sentiment regarding artificial intelligence. Tech behemoths such as Nvidia, Broadcom and Oracle slumped, with the last losing more than one-third in value since it rocketed 36% in September.

Investors, it seems, are growing worried over the high valuations of tech names, as well as the gigantic amount of capital expenditure they are committing to — with some, like Oracle, having to take on debt to fulfil those obligations.

Uncertainty over an interest rate cut in December is also putting a downer on Wall Street. It’s a coin toss as to whether the U.S. Federal Reserve will ease monetary policy then, according to the CME FedWatch tool. That’s a huge difference from a month ago, when traders were pricing in a 95.5% chance of a December cut.

Not having October’s employment and inflation numbers, and possibly never getting them, means the Fed lacks visibility into the state of the economy — and whether it should try to support the labor market or continue reining in inflation.

After all, flying blind makes it hard to see where you’ll land. As of now, that applies both to the Fed and investors trying to navigate the still-hazy ambitions of tech companies.

CEO of Southeast Asia’s largest bank says AI adoption already paying off: ‘It’s not hope, it’s now’

“The proliferation of generative AI has been transformative for us,” DBS CEO Tan Su Shan told CNBC on the sidelines of Singapore Fintech Week. She adding that the company was experiencing a “snowballing effect” of benefits thanks to machine learning. 

Tan expects AI adoption to bring DBS an overall revenue bump of more than 1 billion Singapore dollars (about $768 million) this year, compared to SG$750 million in 2024. That assessment is based on about 370 AI use cases powered by over 1,500 models throughout its business. 

— Dylan Butts

LISBON, Portugal — Top tech executives told CNBC they’re concerned about a bubble forming in the artificial intelligence sector, underscoring growing unease within the industry over soaring valuation.

In recent weeks, markets have been reckoning with the notion that too much capital is pouring into the AI boom, clouding the outlook on revenue and actual profit and putting high valuations into question.

Up to now, warnings around overstretched valuations have mostly come from investors and leaders in the world of finance. Goldman Sachs’ David Solomon and Morgan Stanley’s Ted Pick have warned of potential corrections as valuations of some major tech firms reached historic highs.

The concerns have been crystallized by famed ‘Big Short’ investor Michael Burry, who this week accused major AI infrastructure and cloud providers, or ‘hyperscalers’ of understating depreciation expenses on chips. Burry warned that profits at the likes of Oracle and Meta may be vastly overstated. He recently disclosed put options that bet against Nvidia and Palantir.

However, CEOs of companies who are themselves developing AI, expressed their concerns this week during interviews with CNBC at the Web Summit tech conference in Lisbon.

“I think the evaluations are pretty exaggerated here and there, and I think there is signs of a bubble on the horizon,” Jarek Kutylowski, CEO of German AI firm DeepL, told CNBC on Tuesday.

The sentiment was echoed by Picsart CEO Hovhannes Avoyan.

“We see lots of AI companies raising … tremendous valuations … without any revenue,” Avoyan told CNBC on Tuesday, adding that it is a “concern.”

The market values smaller startups with “just some noise and vibe revenue,” he said, referring to companies being backed even though they have minimal sales.

Vibe revenue is a play on “vibe coding,” a term that refers to using AI to code without needing deep technical expertise.

U.S. markets had their worst day since Oct. 10. That marks a sharp reversal for the Dow Jones Industrial Average, which shed 1.65% to settle at 47,457.22, a day after it closed above 48,000 for the first time. Meanwhile, the S&P 500 lost 1.66% and the Nasdaq Composite tumbled 2.29%.

The slump in stocks can partly be traced to a turnaround in sentiment regarding artificial intelligence. Tech behemoths such as Nvidia, Broadcom and Oracle slumped, with the last losing more than one-third in value since it rocketed 36% in September.

Investors, it seems, are growing worried over the high valuations of tech names, as well as the gigantic amount of capital expenditure they are committing to — with some, like Oracle, having to take on debt to fulfil those obligations.

Uncertainty over an interest rate cut in December is also putting a downer on Wall Street. It’s a coin toss as to whether the U.S. Federal Reserve will ease monetary policy then, according to the CME FedWatch tool. That’s a huge difference from a month ago, when traders were pricing in a 95.5% chance of a December cut.

Not having October’s employment and inflation numbers, and possibly never getting them, means the Fed lacks visibility into the state of the economy — and whether it should try to support the labor market or continue reining in inflation.

After all, flying blind makes it hard to see where you’ll land. As of now, that applies both to the Fed and investors trying to navigate the still-hazy ambitions of tech companies.

Wall Street cools on Oracle’s buildout plans as debt concerns mount: ‘AI sentiment is waning’

Two months ago, Oracle’s stock soared 36% to a record after the company blew away investors with its forecast for cloud infrastructure revenue. Since then, the company has lost one-third of its value, more than wiping out those gains.

The mood of late has turned, with investors questioning whether the AI market ran too far, too fast and whether OpenAI can live up to its $300 billion commitment to Oracle over five years. Of the big cloud companies in the GPU business, Oracle is expected to generate the least amount of free cash flow, said Jackson Ader, an analyst at KeyBanc Capital Markets.

— Seema Mody