Yardeni Says AI Investment Boom Is Here To Stay — But Warns AI Stock Jitters Could Persist

• Yardeni noted $235 billion in prospective AI financing as a sign that capital remains available for the AI buildout.
• SK Hynix expects memory shortages through 2030, reinforcing Yardeni's confidence in AI infrastructure demand.
• Yardeni Research believes another 50 basis points of tightening is needed to remove remaining monetary accommodation.

Market veteran Ed Yardeni expects the artificial intelligence (AI) investment boom to continue but cautioned that AI-related stocks could remain volatile despite encouraging developments in financing, operating performance and semiconductor demand.

In his October 29 QuickTakes note, Yardeni identified three developments that helped revive confidence in the AI trade: prospective financing, improving AI economics and strong semiconductor earnings.

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$235B In Prospective AI Financing

Yardeni highlighted $235 billion in prospective AI financing, including Anthropic’s (ANT) expected $100 billion IPO raise, Meta Platforms’ (META) plans to raise up to $95 billion through equity issuance and SpaceX’s (SPCX) $40 billion GPU financing.

SpaceX disclosed in a regulatory filing on Monday a binding commitment for an approximately $40 billion master finance lease with an Apollo-managed entity to fund GPUs and related equipment, expected to close by year-end.

The analyst noted that these developments suggested capital remained available for the AI buildout, with equity markets providing an alternative if debt financing tightened.

Yardeni also pointed to Anthropic's IPO filing, which showed first-half revenue surging to $16.3 billion from $1.2 billion a year earlier, while operating losses narrowed to $693 million from $2.1 billion. The number of customers spending at least $100,000 annually rose to 11,900 from roughly 950 a year earlier, while revenue per dollar of compute expense increased more than fivefold to $2.08.

AI Stocks Could Remain Jittery Despite Strong Demand

Yardeni also noted Alphabet (GOOG, GOOGL) stock’s decline following its third-quarter revenue and earnings misses but highlighted that Google Cloud revenue more than doubled to $30.7 billion, while the Gemini app reached one billion users.

Meanwhile, SK Hynix's (SKHY) third-quarter operating profit surged more than sevenfold year over year. The chipmaker expects memory shortages through 2030, with production effectively sold out through 2029, according to Yardeni's note.

“These developments reinforce our view that the AI investment boom is here to stay. But that doesn't mean that the AI trade won't remain jittery,” Yardeni wrote.

Yardeni Says Fed Needs More Tightening

On the FOMC’s decision to hold interest rates at 3.75%–4% in a 10-2 vote on Wednesday, Yardeni Research said it expects stronger productivity growth to support faster economic expansion without adding inflationary pressure

That could argue against restrictive policy, but not against returning rates to neutral, which he estimates at 4.25%–4.50%. The firm believes another 50 basis points of tightening is needed to remove remaining monetary accommodation and would not rule out a 50-basis-point hike in December.

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