How important is AI to the stock market? Warnings bring new scrutiny
The stock market has barely blinked this year, shrugging off the Iran war, a surge of inflation and a flurry of new tariffs.
The latest potential hiccup arrived in recent days as industry leaders sounded the alarm about artificial intelligence, a key driver of U.S. economic expansion and investor optimism, some analysts told ABC News.
A flood of cash has poured into projects like data centers and advanced chips, delivering robust earnings and giving rise to optimism about what the future may hold, they said.
Potential new guardrails for the industry and rising interest rates could dampen investment and cool off some stocks, some analysts said. Still, they added, a likely continuation of growth for AI and the wider economy may keep the major indexes rising anyway.
"This moment of scrutiny is a test," Mike Loukas, CEO of TrueMark Investments, told ABC News.
So far this year, the stock market has shown little sign of retreat. The Dow Jones Industrial Average has climbed nearly 8%, while the S&P 500 has jumped 11%. The tech-heavy Nasdaq has surged 13%.
Some top AI firms have fared even better. Chip giant Nvidia, the most valuable company in the world as measured by market capitalization, has seen shares climb 18%. Rival chipmaker Advanced Micro Devices has soared 155%.
Those gains have extended beyond the AI sector to companies as far-flung as construction firms tasked with building data centers and equipment manufacturers supplying those construction firms, Ivan Feinseth, a market analyst at Tigress Financial, told ABC News.
"It's the driving force for our economy right now," Feinseth said. "We're talking about hundreds of billions of dollars in investment in AI infrastructure."
AI investment has accounted for roughly a third of U.S. gross domestic product growth in 2026, according to a study released by ING Markets last month.
Some research, however, indicates AI remains challenging for companies to adopt. Roughly 95% of businesses invested in AI have failed to make money off of the technology, a MIT study last year found, estimating the combined amount spent by the firms is around $40 billion.
A series of grave warnings from top AI executives in recent days threatens to dampen growth in the sector as policymakers weigh regulation, some analysts told ABC News.
Anthropic CEO Dario Amodei published a blog post alerting the public to "serious" risks. Sam Altman, chief executive at rival firm OpenAI, in a post on X acknowledged AI could go "very badly."
The head of xAI, Elon Musk, echoed that view, referring to a post on X from 2014 in which he said AI could prove more dangerous than nuclear weapons.
Critics on Capitol Hill have floated measures such as a "kill switch" available to shut off rogue AI, or vetting standards for AI models imposed by a federal watchdog. It remains unclear whether any legislation will gain sufficient support in both chambers and win over President Donald Trump, who has called AI fears a "hoax."
A possible measure could curtail some AI growth and dial back benefits for the wider stock market, Feinseth said. A recent rise in interest rates has also hiked the cost of corporate borrowing, which has fueled much of the AI investment boom, he cautioned.
"High capital costs are a concern. Regulation is a concern," Feinseth said, but he voiced optimism about continued resilience in the AI sector and the wider economy. "I'm trying to differentiate between a concern and a catastrophe."
Loukas, of TrueMark Investments, voiced similar trepidation, but he acknowledged potential fallout if AI safety risks were to go unaddressed.
"We all should be pretty sober about the perspective that there's a lot of unanswered questions about AI. Will they get answered? Hopefully regulation can be balanced with innovation," Loukas said.
