LIVE MARKETS-Can big tech and government turn AI hype into real returns?

Welcome to the home for real-time coverage of markets brought to you by Reuters reporters. You can share your thoughts with us at markets.research@thomsonreuters.com

CAN BIG TECH AND GOVERNMENT TURN AI HYPE INTO REAL RETURNS?

Citigroup calls AI the defining technology of our time, forecasting a surge in revenues from $43 billion in 2025 to $780 billion by 2030 - an industrial revolution-scale boom driven by nearly 80% annual growth.

Underpinning this leap is more than $400 billion in capex this year alone and a projected $2.3 trillion in capital expenditures by the top U.S. hyperscalers: Microsoft MSFT.O, Google GOOGL.O, Amazon.com AMZN.O, Meta Platforms META.O, and Oracle ORCL.N between 2025 and 2029.

MIT’s Project NANDA finds that while 80% of companies have tested AI tools like ChatGPT, only 5% of custom deployments reach scale due to a persistent "learning gap." Meanwhile, mega-caps like Meta are pressing ahead, with $66–72B in AI data center spending this year and more growth signaled for next year.

"Announced government commitments alone total more than $1.6 trillion for sovereign AI initiatives," Citi notes, highlighting the U.S. Stargate project, a $500 billion public-private partnership, as a historic catalyst.

In January, U.S. President Donald Trump said OpenAI, SoftBank 9984.T, and Oracle plan the venture to build data centers and create over 100,000 jobs in the United States.

"The single most important debate among investors remains AI’s ability to generate a return on this investment," said Heath Terry, Global Head of Technology & Communications at Citigroup, in a note dated 25 August.

Major players are moving fast, Citigroup notes — Microsoft now counts over 100 million Copilot users, Meta is pursuing personal superintelligence, and Nvidia NVDA.O expects AI workloads to demand 100 times more computation than previously estimated.

All eyes are on the state of Nvidia’s China business as the chipmaker prepares to report earnings Wednesday, with revenue expected to rise 53.2% to $46.02 billion a sharp slowdown from its previous triple-digit growth.

For now, AI’s biggest wins are in cost savings, Citi estimates $275 billion annually across the S&P 500 in customer service, code development, and knowledge work, but the real test will be a sustainable, industry-wide transformation.

(Akriti Shah)

*****

EARLIER ON LIVE MARKETS:

US STOCKS NEAR FLAT AS FED UNCERTAINTY SWIRLS CLICK HERE

CHINA LARGE-CAP ETF: TRADERS TAP INTO TRENDLINES CLICK HERE

ECB UNLIKELY TO INTERVENE AMID FRANCE POLITICAL DEBACLE - BERENBERG CLICK HERE

TURNING CAUTIOUS ON THE BRITISH CONSUMER CLICK HERE

AUTOS, MINERS BEAR THE BRUNT OF EARNINGS DOWNGRADES CLICK HERE

FED INDEPENDENCE CONCERNS, FRENCH BANKS WEIGH ON STOXX 600 CLICK HERE

EUROPE BEFORE THE BELL: FUTURES SLIP, FED INDEPENDENCE CONCERNS WEIGH CLICK HERE

MARKETS ASK AGAIN OF TRUMP: 'CAN HE DO THAT?' CLICK HERE