An AI slowdown that takes some air out of the exuberance could actually extend the boom, Wall Street veteran says

Stocks suffered more carnage this week as investors remain nervous about the durability of the AI boom in the wake of mixed quarterly earnings reports.

Alphabet saw its cash flow sink deeper into negative territory in the third quarter, with the Google parent also joining Meta and Amazon in charging ahead with massive spending plans. On Thursday, Alphabet fell about 12%, its worst day on record.

Meanwhile, Microsoft reported strong cloud growth and stayed free cash flow positive, though it said its capital spending will accelerate, while AI chip giant SK Hynix blew away earnings forecasts. And ahead of its IPO, Anthropic’s S-1 filing showed its cash flow turned positive in the first half of this year.

Some on Wall Street see investors sorting out AI winners from the losers rather than giving up on the sector altogether. That’s after numerous head-fakes in recent years that falsely signaled the AI boom was about to go bust.

According to market veteran Ed Yardeni, the AI investment boom faces financial, physical, and political constraints.

Financial constraints are........

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