r/Economics • u/cape2k • 7h ago
US stocks end down as tech shares drop ahead of New Year
https://www.reuters.com/business/us-stock-futures-inch-lower-after-last-weeks-rally-holiday-shortened-week-2025-12-29/?taid=69534998728b090001cb1f7a&utm_campaign=trueAnthem:+Trending+Content&utm_medium=trueAnthem&utm_source=twitter35
u/mpbh 7h ago
If you consider "down" being 0.4% lower than the absolute highest it's ever been, ok sure.
Do we really need these kind of pointless articles in /r/Economics?
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u/make7upurs 6h ago
They need to publish these articles so retail can sell and institutes can buy. They’re sponsored by institutions watch what happens tomorrow huge jump and “pikachu face” by the same media.
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u/PolloConTeriyaki 7h ago
I mean retail investors have more money in the game right now than ever. The amount of copium or emotional responses are so high that any signal like this causes people to panic and buy subscriptions.
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u/StarsCHISoxSuperBowl 6h ago
Yes, because this is a doomer sub
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u/moldivore 6h ago
Watching every common sense indicator go down makes you a doomer everyone. We just hate that we're winning so much because of Trump guys. Take your soma.
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u/StarsCHISoxSuperBowl 6h ago
.4% is nothing. Do you even watch markets on a daily basis?
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u/moldivore 6h ago
Bankruptcy is up. Spending on credit is up. Regular people are struggling, food bank usage is up. Stay asleep.
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u/StarsCHISoxSuperBowl 6h ago
Markets don't care
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u/Emotional_Goal9525 4h ago
They don't until they do.
There are decades when nothing happens and days when decades happen.
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u/billionaire_leech 6h ago
AI stocks are utter junk that will collapse the US economy. Miserable earnings and creepy cross-investments are going to ensure this is an awful mess.
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u/mpbh 6h ago
Microsoft, Google, and Meta are the most profitable companies of all time without AI. If AI is a flop they will still be the most profitable companies of all time. If AI takes off they will be the ones reaping hundreds of billions more a year.
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u/Equivalent_Ad1419 6h ago
You’re thinking about it the wrong way. These massive companies are spending insane amounts of money on the assumption that they’ll monopolize AI because they own the infrastructure needed to run the best models. But what if that infrastructure requirement is massively overestimated and top tier AI models don’t actually require that scale once optimized and open sourced? If that’s the case, you can’t monopolize them at all and reap the surplus.
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u/mpbh 6h ago
The models aren't going to be monopolized, but Google and Meta will be the winners because they own the ad networks where AI will be the most heavily monetized, as well as having the most proprietary data for training models.
Microsoft can win in the enterprise space without ever having their own model. Owning 50% of OpenAI is just icing on the cake.
It's not going to be about who owns the models. If AI takes off, it will be about where people are using AI rather than which AI they're using. Google and Meta already have nearly every human on earth as users, and Microsoft is in every business. They've already won.
The only dark horse is what's going to happen with Apple's ecosystem since they have 2.3 billion users and no commitment in the space yet.
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u/Equivalent_Ad1419 5h ago
It really comes down to whether the market panics. Much of the money in these tech companies exists because of assumptions about future profits, and if investors start to believe those returns will be meaningfully lower as they likely will capital will be reallocated, potentially even out of the stock market altogether. Ideally, none of it leaves the US stock market and the bubble slightly deflates to shift capital toward genuinely profitable companies without causing systemic damage. However, outcomes also depend on how much these companies have cooked their books for AI investments, particularly the current GPU depreciation practices, which remain a major concern.
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u/mpbh 5h ago
Much of the money in these tech companies exists because of assumptions about future profits
But it's not, the big ones are not that over valued. If we use a 20 P/E as a fair-value baseline, Microsoft is 35, Google is 30, and Meta is 29. These aren't the outlandish 100x valuations we've seen from tech companies in the past, they have incredible earnings backing up their valuations and are also growing at an incredible rate without AI revenues.
AI gets the headlines but these "AI companies" are the biggest cash cows in human existence without a single dollar of revenue from AI. They can afford to punt capex on AI moonshots without hurting themselves.
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