The House of Representatives returns this evening to vote on the amended bill that would end the longest government shutdown in US history after 43 days. From the market’s point of view, this is positive news! Economists are going to start getting their data back, workers will get paid, and people can more comfortably start spending again. News of the possible end of the shutdown was released Monday, and markets reacted by rising between 1%-2%. A lot has been in limbo during the course of the shutdown, but what hasn’t stopped generating news has been artificial intelligence. In fact, without labor statistic and inflation data to analyze, AI stuff roared to the forefront of what was deemed newsworthy.
AI-related stocks have had a roaring 2025 such as Nvidia, Palantir, and Oracle generating returns of 43%, 141%, and 36%, respectively. But questions have started to rise about valuations, spending, even potential bubbles. Right now, AI stocks are getting hammered despite posting strong earnings. Meta is down 17% after solid results, Nvidia has slipped from its $5 trillion peak, and companies like OpenAI are projecting massive losses—$74 billion by 2028—even as they plan to spend $1.4 trillion over the next eight years, according to the Wall Street Journal article, “The AI Boom Is Looking More and More Fragile”.
The concern is warranted: there’s much more money going into AI infrastructure than coming out in revenue, and that gap keeps widening. Even so, the fundamentals haven’t changed. Tech companies are still planning to spend over $400 billion this year, and chip makers are projecting continued revenue growth. The reality is that transformative technology doesn’t pay off in 12 months. AI will likely reshape how we work and live but getting there means years of heavy investment before the revenue catches up. While this volatility may feel different (this time it’s different), it’s likely a familiar story we’ve seen before. Short-term pain for long-term innovation. The key, as always, is staying diversified, staying invested, and keeping perspective.
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