LIVE MARKETS-AI: Going round in circles?

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AI: GOING ROUND IN CIRCLES?

Equity markets have wobbled this week as some investors questioned lofty valuations of the tech sector and big U.S. banks warned of a broader market correction.

Some AI sceptics have flagged concerns about "circular" dealmaking within the industry, such as Oracle's recent dealing with OpenAI.

But YT Boon, head of thematic-Asia at Neuberger believes the sceptics may be missing the point.

"The primary goal of all this dealmaking is to prevent a supply-side bottleneck, not mask weak demand," Boon says.

Boon notes that tokens, the unit of output for large language models, are the clearest metric for AI usage, and that growth is booming.

In an example, Boon says that Google's Gemini/Vertex AI processed about 480 trillion tokens in April, up from about 9.7 trillion a year earlier.

"Usage expands as capacity constraints ease, reinforcing demand for multi‑year commitments within the industry," Boon adds.

"While we acknowledge the risks associated with concentration of capital and growing interdependence among major AI players, underlying market demand, capacity, financing, and execution still appear to be reasonably aligned."

(Samuel Indyk)

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