Inside Markets — AI Skepticism

The latest bout of AI skepticism is mostly based on OpenAI’s extremely ambitious capex plans and the new use of hyperscaler debt issuance to fund incremental data center buildouts. This week’s well-received launch of GOOGL’s Gemini 3 added some temporary fuel to the narrative, given OpenAI’s perceived leadership role. In our view, these developments qualify as something to watch rather than something to act upon. Hyperscalers need accelerated compute to compete and enterprise adoption of AI applications/agents is happening faster than most expected a year ago. Using its aggregate production model and survey data, a report from St. Louis Fed concluded that generative AI has increased labor productivity up to 1.3% over the last two years.