Oct 03, 2025

Recently, Morgan Stanley has raised concerns about cracks forming in the AI capex boom, particularly in small-cap stocks that may be overvalued. Chief Investment Officer Lisa Shalett emphasizes the importance of monitoring free cash flow growth in relation to AI technology investment, as the rapid increase in annual hyperscaler capex spending has led to a depletion of cash and a halt in free-cash-flow growth. Investment advice includes selling small-cap stocks, unprofitable tech companies, and diversifying portfolios with real assets like gold, REITs, and energy infrastructure.

In the market outlook, Nasdaq futures are trending higher while Dow industrials futures are lower. Treasury yields are edging higher, and crude oil prices are slightly up. Global M&A; volume has surged past $3 trillion for the year, with deals like the Electronic Arts mega-buyout driving momentum in dealmaking across sectors. Berkshire Hathaway sold a unit for $9.7 billion, Rocket Cos completed its acquisition of Mr Cooper Group for $14.2 billion, and various firms raised significant capital for their ventures.

The financial landscape continues to evolve, with a surge in energy and power deals driven by the AI boom. The focus on narrow banking and stablecoins is gaining traction, with discussions on separating money from credit provision. Notable personnel changes include Taylor Cole joining Blue Wolf Capital as an operating partner and Dave Evans joining The Halifax Group as an operating executive. Other news highlights the use of quantum computing in bond trading, tokenization in finance, and the impact of AI tools on analyst forecast accuracy based on LinkedIn profiles.

Updates on OpenAI’s valuation reaching $500 billion, Meta’s AI group changes, Bridgewater’s hedge fund performance, and the cooling down of the crypto stockpiling craze were also noted. The financial landscape remains dynamic, with ongoing developments shaping the industry and raising questions about the future of finance.

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