Is the AI Bull Market Over? Market Full of Doubts, Nomura Points to Four Potential Turning Points: Pricing Confusion and Observant Mood Intensify

Strong profits and aggressive capital expenditures by tech companies have failed to boost stock prices, leaving investors confused. On Friday, Nomura Securities strategist Matsuzaka Chu issued a research report pointing out that the cost-benefit balance of AI investments has become ambiguous, and the market is facing multiple 'AI boom end scenarios' with significant uncertainty.

The report outlines four potential turning points: first, AI investment overheating compressing cloud vendor cash flow leading to spending slowdown; second, high memory prices pushing up costs and causing contraction; third, rising raw material prices prompting central banks to turn hawkish; and fourth, high memory prices causing semiconductor investment overheating followed by price declines.

The interplay of these four scenarios makes it difficult to clarify the cost-effectiveness of AI for the overall economy. The upward trend of semiconductor stocks, which have benefited from price increases, seems to have reached a turning point.

Market reactions are showing internal division: semiconductor stocks have plummeted, the seven US tech giants are overall flat, and software stocks are bucking the trend, with funds being re-priced within the tech sector; defensive and consumer stocks are relatively strong, while tech, capital goods, and banks are under pressure.

At the same time, the fear index (VIX) has risen to 16.7, while bond and forex market volatility continues to decline, indicating that uncertainty is concentrated in the stock market.

Even if the financial performance and capital expenditures of US mega cloud service providers remain strong in the next two weeks, they may not drive cross-group boosts under the interference of multiple scenarios.

The bond market has not yet priced in the end of AI. Currently, US bonds are bearish flattening, with the 10-year yield rebounding to 2.31% and the break-even inflation rate falling to 2.23%; the market expects the Federal Reserve (Fed) to raise rates by 3 basis points this month, 14 basis points cumulative by September, and 27 basis points cumulative by December, with the 2-year forward OIS rising to 3.84%, and the pricing logic still centered on rate hikes.

Matsuzaka Chu judges that the bond market has not seen rate cut bets due to expected AI slowdown, indicating that the pricing of the end of the boom is not yet complete, and investor doubts are still brewing but have not yet formed a consensus.