Investing in AI burning capital? October will be turbulent? We check what's going on on Wall Street

When the valuations of the campaign achieve historical maxima, arguments about the new market reality appear. However, at a time when the largest technology companies spend billions on artificial intelligence, experts warn that many of these investments may never turn.

Jerome Powell: Fed sees high valuations, but he sees no risk

The Federal Reserve, when making decisions regarding interest rates, also takes into account the prices of financial assets. Jerome Powell, chairman of the Fed, admitted this week that valuations on the stock markets reached high levels.

– We analyze general financial conditions and ask ourselves whether our policy affects them in a desired way. According to many indicators, stock prices are quite high – said Powell, asked if the FED includes assets valuations in the decision -making process.

After the last week's reduction of interest rates by the Fed, the American S & P 500 index beat records many times, and from the beginning of the year increased by nearly 13%.

“Markets listen and react us, assessing the future interest rates, and on this basis they value assets,” said Powell. He added, however, that although the valuations of the shares are relatively high, “this is not a time of increased financial risk.”

Bank of America: This is “new normality”, not a speculative bubble

Although from a historical perspective, American actions seem expensive, deeper analysis shows that their high valuations can be justified, say strategists from Bank of America.

According to 19 out of 20 criteria measured by the bank, shares from S&P 500 are expensive, and according to four of them the valuations are at record levels. Despite this, according to analysts, the current valuations have solid foundations, such as low company debt, more stable profits, increased efficiency and profit margins more stable than a decade ago.

“The S&P 500 index has changed significantly compared to the 80s, 90s and 2000. We should probably see today's multipliers as new normality (English New Normal), and not expect them to return to the average of the past era “ – Bank of America strategists wrote in analysis for customers cited by the Bloomberg agency.

These arguments are in contrast to the statements of some experts from Wall Street, who are afraid of valuations reminiscent of an internet bubble (dot-com). “Buying shares with current multipliers can arouse discomfort, but a boom in sale, profits and GDP would solve this seemingly difficult situation. It is easy to support such a scenario when the main world regions conduct fiscal stimulation, the Fed again lowers feet, and more and more companies are increasing their profits,” add strategy. ” In their opinion, the scenario of revival in 2026 is more likely than staging or recession.

This optimistic perspective is supported by the latest data – the revised estimates showed that the economic growth in the US in the second quarter was much faster than originally assumed, and in the annual basis amounted to 3.8% (compared to 3.3% in the first reading).

Goldman Sachs: October can be turbulent

Analysts from the Goldman Sachs investment bank recommend investors to prepare for a restless October. The basis for expecting greater variability are discussions on further reduction of interest rates by the Fed, the upcoming season of publication of results for the third quarter or the threat of another suspension of government agencies in the USA.

Historical data from 1928 show that The fluctuations in the S&P 500 index in October were on average 20% higher than in the other months. “Variability in October is much more than a coincidence. This month is crucial for many investors and companies that are trying to manage their results before the end of the calendar year. Such pressure increases trading volumes and variability in the markets,” Goldman Sachs analysts explain.

David Einhorn: A huge part of the investment in AI will not pay

Unprecedented investments of companies in the infrastructure of artificial intelligence can lead to a burnout of huge amounts of capital, even if the technology itself turns out to be a success – he warns David Einhorn, managing the Hedge Fund and founder of Greenlight Capital.

He points to such companies as Apple, Meta Platforms and OpenAI, whose capital investments reach “billion or $ 500 billion a year”, and their return is highly doubtful.

– The numbers in question are so extreme that it is really difficult to understand them. There is a high probability that a huge part of capital will be lost in this cycle – said Einhorn during a discussion on the New York stock exchange.

A well -known investor sets a clear border between the long -term importance of artificial intelligence and short -term economic benefits in its financing. In his opinion, although many AI projects will be created, investors will not receive a refund they expect.

JPMorgan: In 2026 it is worth focusing on shares from the euro area

After a period of consolidation, there may be a convenient moment to increase investments in the shares of companies from the euro area – they believe strategists from JPMorgan. They argue that fiscal stimulation in the region will begin to translate into profits of companies, which in turn It should drive stock prices in 2026. In recent quarters, the purchase programs of own shares in the euro area have stagnated, but the situation should change as the financial results improve.

“The increase in profits and purchase of own shares may be one of the reasons why the euro area will be in next year in a more favorable situation, as soon as the current consolidation period ends,” analysts forecast.

The regional index of the European Stoxx 600 shares has gained 9%since the beginning of the year, while the increase in S&P 500 (in American dollars) amounted to about 12%.

Rotschild & Co Redburn questions the valuation of Oracle

Oracle shares, one of the hottest companies of recent months, have been about 75% this year, of which 24% only last month. The impulse was contracts with the AI ​​leader, Opeli. Recently, however, the share price began to weaken when investors began to question the valuation and the prospects contained in it.

Enthusiasm was cooled by the latest analysts' grades. The Rotschild & Co Redburn Financial Advisory company in its first analysis issued the “Sell” recommendation for Oracle, with a target price of 175 USD – 40% lower than the current market price.

“The market significantly overestimates the value of Oracle revenues from contracts for cloud services,” says Redburn analysts. In their opinion, investors are mistaken, expecting that providing high computing power for OpenAI will bring the benefits of the scale. “Oracle's business model is largely based on fixed costs, and the value resulting from growth falls OpenAI. It is a business based on margins, and as our analysis shows, these are relatively low margins,” they sum up.