Markets drift as AI doubt weighs on stocks

A MIT report questioning AI profitability coincides with geopolitical developments and a pullback in major indices.

Markets Fall as MIT AI Report Signals Weak Returns

The S&P 500 ETF SPY and the Nasdaq 100 ETF QQQ finished lower on Tuesday after a MIT study questioned the profitability of AI pilots, signaling a hesitation among investors about the rush into AI assets. The MIT survey estimates U.S. companies have invested roughly 35 to 40 billion dollars in AI, yet only a small share of integrated pilots are delivering measurable profit and loss impact. OpenAI chief executive Sam Altman warned that the industry faces a bubble with periods of irrational exuberance and that some investors may lose money.

Separately, S&P Global affirmed the U.S. long-term rating at AA+ on a backdrop of tariff revenue expected to offset tax cuts and spending measures from recent fiscal legislation. The market closed with the S&P 500 down 0.59% and the Nasdaq 100 down 1.39%. In political news, the White House signaled a potential bilateral meeting between Ukrainian president Volodymyr Zelenskyy and Russian president Vladimir Putin to pursue a ceasefire, while Trump supported air security guarantees for Ukraine. Polls show Trump’s approval at a term-low, complicating the political backdrop for markets.

The MIT findings highlight a reality check for a sector built on big promises and public hype. If only a small fraction of AI pilots generate real value, optimism may fade quickly, leaving a taste of disappointment among investors and workers alike. This tension between hype and actual earnings is a recurring risk for tech leadership and fund flows.

Geopolitics add another layer of uncertainty. Diplomatic moves in Ukraine and domestic political dynamics in the United States can swing market sentiment as policymakers weigh the costs and benefits of AI subsidies, tariffs, and regulatory guardrails. The S&P Global rating reminder that fiscal tools can offset deficits offers some ballast, but it does not eliminate the broader mood shift toward caution in high-growth areas.

Highlights

Markets will watch how quickly profits prove out against the hype surrounding AI