In the US on Tuesday, Wall Street ended lower, with the Dow Jones Industrial Average down 0.2%, the S&P 500 down 0.4% and the Nasdaq Composite down 0.7%.

“Investors took a breather from buying US stocks yesterday, near all-time highs, as a report showing Oracle’s profit margins were much lower than expected dampened the euphoria that followed the OpenAI and AMD announcements earlier in the week,” Swissquote’s Ipek Ozkardeskaya said. “But data centre demand is expected to rise exponentially through 2030 largely driven by AI…That outlook helps explain why dip-buyers stepped in as Oracle shares fell to around USD270. And that small bump will likely be forgotten quickly, with this morning’s news that Nvidia is considering investing USD20bn in Elon Musk’s xAI.”

She continued: “The real question isn’t whether AI will grow, but whether market pricing has run ahead of itself. And no I don’t buy for a second that AI models won’t generate revenue. There will certainly be losers, but also major winners.”

Ozkardeskaya noted that “the question of a bubble looms” but added: “Evercore ISI, in a note titled

A Big Beautiful Bubble, argues that while the S&P 500 is indeed in bubble territory, it likely has room to expand possibly pushing the index to 9,000 by the end of next year with a 33% probability.

“Eye-popping, yes, but they argue that rate cuts, improving sentiment, stronger earnings, reduced uncertainty and productivity gains from AI could keep investors piling in before the bubble eventually bursts…There’s also still ample room for leveraged investors to join the rally, given that net short positions in the S&P 500 remain deeply negative. The takeaway ? Don’t fear the bubble play along.”