Summary
- Alphabet and Microsoft both missed AI capex expectations for Q3 - this bursts the AI infrastructure bubble.
- Caterpillar reported a 22% increase in inventory; this signals overproduction and confirms the AI capex slowing thesis.
- ServiceNow reports strong AI ACV but provides weak revenue guidance, indicating that AI monetization is lagging AI adoption.
- These three stocks crashed after the report by 10-27%; that's what the bubble burst looks like.
pcess609/iStock via Getty Images
The AI bubble burst unfolding
The AI bubble burst thesis has been confirmed by Alphabet (GOOG) (GOOGL), Caterpillar (CAT) and ServiceNow (NOW). These companies are part of the
Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.