AI boom sparks rally, frenzy, and fear

An AI boom has driven stock markets to record highs, big tech firms are piling hundreds of billions of dollars into new tech, while consumers, workers and businesses are grappling with existential questions unleashed by the likes of ChatGPT and Claude.

Some analysts say artificial intelligence will boost productivity and make businesses more profitable. But some warn of a dystopia of AI-fuelled mass unemployment where some sectors no longer exist, while others suspect an AI bubble, opens new tab will pop with a potentially painful unwind.

This dashboard of key metrics shows the reach and scale of the AI boom.

The AI-driven rally has helped drive equity markets to record highs, offsetting risks and uncertainties created by the Iran war.

AI bellwether Nvidia alone has rocketed over 1,300% since the end of 2022. Its quarterly earnings, a gauge of the broader AI narrative, are as closely watched by investors as some economic indicators.

Microsoft, Google-owner Alphabet and Amazon – dubbed “hyperscalers” because of their focus on building AI data centers – are also popular.

It’s not just a U.S. story.

European tech stocks, which include chip-making machine giant ASML, are at their highest since 2000. South Korea’s market, home to chipmaker Samsung Electronics, is near a record peak.

SK Hynix and Micron Tech, meanwhile, have been floating in and out of the elite group of companies with a market capitalization of at least $1 trillion. This group could grow with upcoming listings, such as Elon Musk’s SpaceX.

No surprise that the tech stock surge has stoked concerns about a bubble that could drag world stocks down sharply if it pops. A recent Bank of America investor survey found 40% of fund managers believed AI stocks are in a bubble.

Although the AI rally has been broad, a divide is emerging between companies that investors reckon will benefit from the megatrend and those whose business models investors suspect could be disrupted or replaced.

Software and data analytics firms are recovering after a slide in February as a new AI tool by Anthropic spooked investors.

In what was dubbed the ‘SaaSpocalypse’, content and technology firm Thomson Reuters and Britain’s Relx suffered their biggest one-day share price drops in decades. Germany’s SAP, caught in the crosshairs, has plunged more than 40% in the last year.

Software and data analytics stocks were already under pressure since mid-2025 as more powerful AI models were released. The reversal in sentiment is stark – the same names were initially dubbed potential AI winners by analysts.

AI disruption fears also hit Indian IT shares, wealth advisors and private credit firms exposed to the software sector.

How quickly businesses adopt AI is key, as this will give some sense of the impact on productivity gains and job markets.

The impact is relatively limited so far.

Still, the U.S. Census Bureau’s Business Trends and Outlook Survey provides a near real-time gauge of corporate uptake. And what happens in the United States could be a guide to what follows in other big developed economies.

As more workers add AI tools to their arsenal and potentially replace the need for human input, there are questions over how this will affect the employment rate.

Companies are already citing AI as a factor leading them to slash jobs.

A race to build the infrastructure needed to support AI is on. Morgan Stanley estimates big tech will spend $3 trillion between 2025 and 2028 on a global expansion of data centers.

It estimates hyperscalers will spend over $800 billion on capex in 2026, roughly the same as what all non-technology S&P 500 companies spent in 2025.

The massive investment in data center projects is helping to underpin economic growth, especially in the United States.

Yet, data collated by DC Byte for Reuters show projects in several major countries remain at an early stage. Around 68% of the 679 U.S. data center projects it tracks are still not yet being built, for instance. This figure includes all data center projects including those for AI purposes.

In the UK, where the AI gold rush has spawned a new industry around data center wannabes, a staggering 87% of projects are not yet being built.

The build-out is increasingly being funded by debt, raising financial stability risk concerns and creating a big tech credit default swaps market as some investors try to shield their exposure to potential losses.

The data center build-out is driving an unprecedented surge in electricity demand globally, running up against power constraints across regions, as projects grapple with ageing grids and limited supply.

As well as delaying projects and forcing data centers to be more flexible, the surge is raising concern about the environmental impact and potential for higher consumer prices.

Utilities companies are benefiting, but concerns about emissions contributing to global warming are also growing.

Global utilities stocks have jumped roughly 40% since late 2022. Power companies NextEra Energy and Dominion Energy plan to merge in a $67 billion deal that would create the largest U.S. electric utility company.