AI Spending Slowdown Poses Risk to US Economy and Markets

Investing in artificial intelligence has become so central to the US economy and stock market that a slowdown in its development poses a significant risk to both, according to investors and analysts. AI-related spending accounts for roughly half of US GDP growth, and nearly $33 trillion in market value has been added to the S&P 500 since late 2022. However, rising interest rates are making the massive borrowing needed to fund AI more expensive, and some investors are skeptical that returns will justify the spending. Calls from industry leaders like Anthropic CEO Dario Amodei to slow AI development for safety reasons have added a new risk, though such a slowdown is debatable. A pullback in spending could reset profit expectations for the entire AI ecosystem, and one economist has warned the Nasdaq 100 could drop as much as 50% if the investments don't pay off.