Artificial Intelligence, Actual Bills
For the week ended 10/24/26.
Apparently, teaching computers to think is expensive. So is filling up your car. Last week, investors got another reminder that the AI revolution and the old-fashioned oil market share an inconvenient feature: both require enormous amounts of money.
Let’s start at the pump. Brent crude jumped 6.2% for the week to $116.72 a barrel as fears of renewed U.S.–Iran hostilities and attacks on Saudi energy infrastructure rattled markets. Higher energy costs squeeze household budgets, raise business expenses, and complicate the Fed’s inflation fight. Unfortunately, central bankers can adjust interest rates all they want; producing another barrel of oil requires different equipment.
Meanwhile, Wall Street’s favorite growth story is getting a financing subplot. More AI infrastructure spending is being funded with debt, making borrowing costs increasingly important. Meta’s proposed nonvoting stock adds another wrinkle: investors would help finance the spending while having little say over it. Please pass the checkbook – and keep your opinions to yourself.
To be fair, the earnings are substantial. Analysts expect S&P 500 third-quarter profits to rise roughly 30% from a year earlier. But Nvidia and Micron alone account for 34% of that projected growth. That’s an impressive contribution from two companies – and a considerable responsibility. Strong profits support the AI story; such concentrated growth also leaves investors exposed if the payoff disappoints.
Across the markets, real estate led the weekly performance table with a 1.2% gain, followed by bonds at 0.5%. U.S. stocks slipped 0.5%, while foreign shares brought up the rear, losing 1.8%. A useful reminder that diversification occasionally means owning something other than the companies building tomorrow’s computers.
This week brings decisions from the Federal Reserve on Wednesday, the European Central Bank on Thursday, and the Bank of Japan on Friday. All three are expected to hold rates steady, with markets assigning only about a 10% chance of a Fed hike. The real interest will be in what policymakers say about the next move.
Until then, enjoy your morning coffee. At least it still costs less than a barrel of oil. Good morning.
Interesting data point of the week.
Comments