Weekly Update - United States: Artificial intelligence shakes up the markets

For several weeks, news surrounding artificial intelligence (AI) has been driving financial markets, balancing steadily rising profitability with growing fears of a bubble forming. Nvidia’s excellent results have not been enough to fully reassure investors. The equity market correction has continued, although its magnitude remains limited: the S&P 500 is still up by 10% year-to-date, while the NASDAQ has gained over 14%. Beyond the markets, massive investments in AI provide a genuine support to U.S. growth in 2025. This economic resilience clouds expectations of interest rate cuts by the Federal Reserve, increasing the uncertainty currently weighing on the markets.

Strong results continue for the AI sector. In recent weeks, equity markets have been unsettled by shifting investor perceptions of the AI sector. A correction has begun, driven by fears of a financial bubble amid very high valuations and increased leverage for some companies. In this context, Nvidia’s Q3 2025 earnings release was highly anticipated. The company holds a key position in the sector thanks to its near-monopoly on next-generation semiconductor production. The figures significantly exceeded expectations: revenue rose 62% year-on-year, profit increased by 60%, and guidance for the upcoming quarter was revised upwards. However, this announcement triggered only a temporary rebound in indices, with the S&P 500 ending the week lower.
This correction, following several weeks of strong gains, should be put into perspective. Beyond Nvidia, the entire AI sector shows robust profitability, with a 25% increase in Q3 2025, which should continue to support its outperformance in equity markets.

U.S. growth driven by AI. The strength of the AI sector is also reflected in macroeconomic data. One factor explaining the resilience of the U.S. economy, despite significant uncertainties, is the marked rise in AI-related investments. Spending on IT equipment, software, and R&D grew on average by 20% in the first half of 2025, contributing to more than half of this year’s GDP growth. Nvidia’s optimistic outlook points to sustained momentum in the coming quarters. Furthermore, the equity market gains year-to-date boost household wealth effects, supporting consumption.

A more cautious Fed adds to market uncertainty. Minutes from the October monetary policy committee confirm a cautious tone in communications from Jerome Powell and Fed members. The majority appear in favor of a pause in December, absent new official data. This prudence also reflects the economy’s resilience and persistent inflationary pressures. Expectations for rate cuts in December have sharply diminished, while uncertainty remains high ahead of the January meeting. This situation adds a new source of volatility and heightens current market unease.

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