AI doubts drive bond rally as Meta, IBM flash warning signs

Renewed investor anxiety over the sustainability and commercial payoffs of artificial intelligence drove a shift out of tech stocks and into U.S. Treasuries on Thursday, causing a bond rally and a sell-off in equities. The defensive rotation was triggered by concerns over mounting AI capital costs, potential risks to credit ratings, and the possibility of substantial debt or equity issuance. Large enterprises are also scrutinizing the real return on their AI investments, with some pushing back on aggressive budgets. This broader market unease reflects a growing skepticism about whether the massive spending on AI infrastructure will deliver sufficient financial rewards, leading investors to favor the safety of government debt over riskier technology assets.