The US stock market’s growing dependence on a small group of AI leaders, particularly OpenAI, is creating a fragile setup if those companies fail to meet massive long-term commitments, warns Steve Sosnick, chief strategist at Interactive Brokers.
Speaking in a new CNBC interview, Sosnick says markets are increasingly anchored to expectations that a handful of AI companies can scale fast enough to justify what is already priced into stocks.
“We’re relying on a cadre of private, hopefully soon-to-be public, AI companies who have to scale up immensely to meet the commitments that they have.”
He points to OpenAI as a clear example of the imbalance he sees forming between revenue and obligations. The ChatGPT creator has $1.4 trillion in spending commitments compared to just $20 billion in revenue.
“I don’t mean to pick on OpenAI, but how does a company with, call it $20 billion in revenue, meet a trillion dollars of commitments over the coming five years? How do you do that?”
He warns that failure to meet those commitments would not stay contained to one company, but would ripple through the broader market narrative.
“If they don’t do that, I think that upends a lot of the earnings growth that’s priced into the market.”
Even as major technology stocks continue to drive daily market performance, Sosnick says that optimism could quickly reverse if execution falters.
“Everybody’s back to Mag 7 day again today, at least so far, but if they don’t deliver, that changes the entire earnings story holding this market up. We are so top-heavy.”
JPMorgan Asset Management has flagged OpenAI as the emerging biggest risk to the AI trade. The bank also took note of the firm’s massive spending commitments that are poised to collide with America’s energy infrastructure constraints.
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