Stock market cracks widen as AI investment doubts grow

U.S. stocks have fallen from record highs as investors doubt returns on massive AI investments, potentially signaling a shakier economy for consumers. The S&P 500 is down over 1% and the Nasdaq nearly 4% from last week's peaks. Declines follow reports of slowing revenue growth at Anthropic, plus fears that Chinese memory chip production could cause oversupply. Investors are also selling bonds backing data centers over concerns AI revenues won't cover borrowed funds, prompting economist Ed Yardeni to cut his S&P 500 year-end target to 7,900. Tech spending drives nearly half of U.S. economic growth this year, creating a wealth effect supporting consumer spending and jobs. However, rising business inflation and potential sustained tech declines pose downside risks, though some executives argue AI investment and employment strength outweigh these threats.