“Fear and greed” notoriously are drivers of equity market sentiment and that is clear in the yo-yo behavior surrounding artificial intelligence equities recently.
A positive development such as a new chip announcement, a major partnership like the AWS/OpenAI compute services deal, or strong earnings from an AI leader pushes the market into "extreme greed" territory, driving up prices quickly.
But then reports of high AI capital expenditure, delayed profitability for end-users, or a general sentiment survey warning of a "bubble" causes profit-taking and selling, plunging the market into "fear" sentiment, leading to sharp, temporary pullbacks.
The cycle resets because the fundamental belief in AI's future remains generally strong. Investors who sold out of fear often rush back in for fear of missing the next leg up (greed), making the dips short-lived and creating the current high-volatility, upward-trending cycle.
But skepticism and hope continue to coexist and oscillate.
Beyond the volatility, we might argue that “high-performance computing capability” has become a strategic commodity.
High-performance compute capacity arguably has become the single most critical, scarce, and expensive strategic resource in the AI industry.
If so, long-term, multi-billion-dollar compute contracts are now a competitive necessity, resembling procurement models for essential commodities like energy or raw materials. But volatility will persist until some future time when there is much more predictability about AI investments and revenue gains.
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