AI boom brings fresh risks to US markets, and more money to M&A

 The AI boom is bringing new risks to the financial markets as investors flock to tech stocks and executives pay steep premiums to buy AI technology they cannot build in-house, warned two top finance executives.
AI has become the “number one topic of conversation” for both investors and corporate executives, Matthew Danzig, managing director at investment bank Lazard, said on a panel discussion with Citadel Chief Risk Officer Joanna Welsh at Reuters Momentum AI 2025 conference in New York this week. Companies are scrambling to articulate an AI strategy, often acquiring capabilities or proprietary datasets to stay competitive, the tech banker said.
“Every company that’s a potential target is figuring out their AI angle,” he said. Valuations are being driven to historically high levels as investors bet on potential profits instead of current fundamentals, he said. “It’s markets willing to pay for the future.”

NVIDIA’S EARNINGS

The industry will need roughly $7 trillion in capital by 2030 to fund its growth – and that is just for data centers, according to McKinsey & Co. Investors, however, have largely brushed aside concerns about the increasing amount of leverage in the system and the lack of revenue to support all the debt needed to finance that growth.
Shares of chipmaker Nvidia (NVDA.O), opens new tab, which rose sharply after the $4.5 trillion company on Wednesday reported record revenue and a 65% year-over-year surge in net income for its fiscal third quarter, took a negative turn on Thursday. The shares were down 2.2% at $182.46 in afternoon trading, dragging other tech stocks down as concerns over an AI bubble resurfaced.