This is the conclusion of today's Morning Brief, which you can read Sign in Delivered to your inbox every morning, along with:

If the summer was about AI's ROI, or lack thereof, how much patience does Wall Street have for the tech industry's fall earnings?

Judging by the rise in chip stocks, investors waiting for details about where all the infrastructure money is going and when new revenue will come will have to wait a while longer. A valuable asset is one's own defense.

As analysts push tech executives for clearer timelines for supposed AI transformation, chip names continue to rise. Nvidia is once again threatening Apple as the most valuable company in the market. Semiconductor stocks are posting gains, making up for August's decline. This reflects strong demand for AI processing and infrastructure as well as disregard for near-term concerns about rising capital spending. Chasing the dream is expensive.

And once again investors are wondering where the limit is – if it exists.

The third-quarter reports are designed to test those limits, with even more money at stake. The longer the investment hose remains open and the more aggressively executives merge their identities with the AI ​​wave, the harder it will be to turn back. Megacap tech companies are expected to spend $215 billion on AI investments this year, and another $250 billion in 2025, according to Goldman Sachs.

There is no slowdown in investment yet. However, we will be looking for clues as to how long AI growth will continue until the company's whims, preferences and future spending become visible in spreadsheets. It is only a matter of time before the hoped-for productivity increases and “innovative AI use cases” materialize.

The tight, symbiotic ecosystem of AI hardware sales suggests that previously robust fundamentals could be destabilized once Big Tech loosens its spending or pivots elsewhere.

Tech giants largely disappointed Wall Street last quarter. Only Meta was able to achieve a clear victory. While reactions to earnings from Alphabet (GOOG, GOOGL), Microsoft (MSFT) and Amazon (AMZN) highlighted how heavy AI investments can become a liability, Zuckerberg showed that Wall Street doesn't mind capital spending increase, as well as all other areas of the business exceed expectations. This is a high hurdle that needs to be overcome. And it only gets harder as the expenses side of the ledger grows larger without any sure income to offset it.

Looking at past risks is a virtue at the top of the career ladder. The same applies to suppressing bladder noises. If the upward trend in chip stocks is any indication, the tech giants will continue to double down on their mega payouts. This is what we would expect from persistent leadership. Even if everyone else is anxious for answers.

The story continues

Hamza Shaban is a reporter for Yahoo Finance covering markets and economics. Follow Hamza on X @hshaban.

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