There’s growing doubt that firms are getting what they pay for when it comes to

artificial intelligence

, the latest Markets Pulse survey showed. That is adding to concerns the US$16 trillion rally from the brink of a bear market is nearing its breaking point.

The trend of AI fuelling outperformance in corporate results is here to stay, according to more than two thirds of 149 respondents to a poll conducted from Sept. 29 to Oct. 8. Yet about the same number of survey takers said the amount of money firms are spending on AI isn’t justified by the returns.

That tension mirrors one seen in the broader equity market. The

S&P 500

has notched 34 record highs so far this year, decisively recovering from its troughs in early April, when

U.S. President Donald Trump

unveiled broad tariffs — a move that wiped out US$2.5 trillion of market value a day after the announcement.

Yet echoes of concern ring loud from the likes of hedge fund billionaire Paul Tudor Jones, who this week warned of a bubble burst that could be “more potentially explosive than 1999.”

While hand-wringing over the benchmark’s repeated ascent to fresh peaks in the recent months isn’t new, it took on a new dimension this week after AI giant

Nvidia Corp.

and its rival

Advanced Micro Devices Inc.

both unveiled deals with OpenAI worth billions that were criticized as “circular.”

“Every day brings a new headline about

Big Tech

’s AI arms race,” said Irene Tunkel, chief U.S. equity strategist at BCA Research. “The total bill could easily reach trillions before the frenzy cools. Is it worth it? That depends on who’s spending.”

“Stocks face lofty expectations heading into the third-quarter earnings season as analyst estimates are much higher than they were for 2Q. While AI giants draw most of the attention, the real pressure may fall on a smaller group of hot stocks which have soared since April’s 2025 low,” said Bloomberg macro strategist Tatiana Darie.

Questions over whether equity markets are in a bubble could get answered as soon as next week.

JPMorgan Chase & Co.

and other big U.S. banks are scheduled to kick off the third-quarter reporting cycle, with analysts expecting the Federal Reserve’s recent interest-rate cut and dovish pivot to provide a tailwind.

Sell-side researchers expect the S&P 500 profits to grow 7.2 per cent in the quarter from the same time a year ago in what would be the slowest earnings growth in eight quarters. Meanwhile, earnings per share is forecast to climb nearly 11 per cent this year, according to Bloomberg Intelligence.

More than half of the survey respondents said that’s too optimistic, as they brace for tariffs to significantly impact corporate results in the final two quarters of 2025.

One item in earnings statements for the upcoming reporting season that is bound to get extra scrutiny is capital expenditures, particularly in relation to AI — a point highlighted in the survey results noting concern over spending and returns.

Such spending has driven tech stocks higher globally, and it’s set to ramp up further. Spending from U.S. mega-caps is expected to reach US$1.1 trillion between 2026 and 2029 and total AI spending will surpass US$1.6 trillion, according to Bloomberg Intelligence data.

That’s up from a combined US$309 billion in capital expenditures across the Magnificent Seven, minus Tesla, for the past 12 months, data compiled by Bloomberg showed. Most of it has largely gone to AI buildouts.

  • Shopify continues to change top brass
  • More high-grade debt now is tied to AI than banks

“Over the next few years more than just a handful of mega-cap companies will need to monetize their AI investment,” said Scott Wren, senior global market strategist at Wells Fargo Investment Institute. “For many, right now, AI is a cost not a revenue stream. That might not be a big headwind now but it will be down the road.”

With assistance from Kerry Benn and Tatiana Darie

Bloomberg.com