Foreword

Alyson Shontell

Editor-in-Chief

“Are we in an AI bubble?” is the No. 1 question business leaders and investors are asking right now. This week’s stock market selloff, which came despite spectacular earnings from Nvidia (No. 31) on Wednesday, shows many are feeling skittish.

There are a few key things to consider when weighing that multitrillion-dollar question.

The massive amount of capital expenditure tech giants are deploying on AI solutions, especially AI data centers and Nvidia’s GPU chips.
The fact that most of that money is being spent on just a handful of companies that are increasingly interlocked—including on private companies with unproven business models and (so far) no profits.
When companies will finally start showing AI ROI.

For now, the AI bubble may have more room to run. Goldman Sachs (No. 32) predicts AI capex spending will further increase in 2026, up from an estimated $390 billion this year. After that, investors are going to demand concrete results in what Fortune’s Jim Edwards dubs a “show me the money” moment.

If they can’t, the global fallout won’t be pretty.

For a close-up look at Nvidia’s role in the center of this circular AI economy, read this piece from Fortune’s Shawn Tully. And for a glimpse how the AI party could end for investors, read Jim here.

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Deals & Developments

Apple (No. 4) must pay medical technology company Masimo $634 million for violating its patent rights related to features used in the workout mode and heart-rate notification features on the Apple Watch. An Apple spokesperson stated that the company plans to appeal the ruling. Meanwhile, this week, the Supreme Court declined to hear a patent appeal from Gesture Technology Partners against Apple, Google (owned by Alphabet (No. 7)), and LG Electronics (No. 215 on the Fortune Global 500) regarding their use of motion-sensing technology.
A federal judge ruled in favor of Meta Platforms (No. 22) in a case brought by the Federal Trade Commission that accused the company of engaging in monopolistic practices with its acquisitions of Instagram and WhatsApp in 2012 and 2014, respectively.
Comcast (No. 35), Netflix (No. 116), and Paramount (No. 147) have all submitted offers for Warner Bros. Discovery (No. 114), per the Wall Street Journal. Paramount, which made previous offers for the company that were ultimately rejected, is the only bidder pursuing an acquisition of Warner Bros. Discovery in its entirety. Netflix and Comcast’s offers are only for Warner Bros. studios, HBO, and HBO Max. Warner Bros. Discovery is already pursuing its own plans to separate its cable TV business from its streaming and studio operations. Variety reported that Paramount is bringing together multiple sovereign wealth funds in the Middle East to fund a $71 billion bid for Warner Bros. Discovery, which Paramount describes as “categorically inaccurate.”
Abbott Laboratories (No. 107) acquired Exact Sciences, a developer of cancer screening and diagnostics tests, for approximately $21 billion. The acquisition is set to expand Abbott’s market share in the fast-growing cancer screening market.
Microsoft (No. 14) and Nvidia (No. 31) announced a new partnership with Anthropic, investing $5 billion and $10 billion, respectively. Anthropic will purchase at least $30 billion worth of Microsoft Azure computing services powered by Nvidia systems, Microsoft enterprise customers will have broader access to Anthropic’s Claude models, and Nvidia and Anthropic will collaborate on design and engineering.

Overheard

“I think I’m deeply uncomfortable with these decisions being made by a few companies, by a few people.”

—Anthropic CEO Dario Amodei on AI regulation

On earnings calls:

Walmart (No. 1) far exceeded earnings estimates with $179.5 billion in quarterly revenue as the retailer attracted deal-seeking customers from all income levels and continued to see returns from its growing e-commerce business. The strong results prompted the company to raise its full-year earnings forecast for the second consecutive quarter. Read more: Walmart wins the economic anxiety trade as cash-strapped Americans’ hunt for deals delivers another blowout quarter
Home Depot (No. 24) missed Wall Street’s estimates and only narrowly beat on revenue with $41.4 billion for the quarter, prompting the company to lower its full-year earnings forecast. On the earnings call, CEO Ted Decker cited weakness in the housing market that’s “disproportionately impacting home improvement demand” for the results and noted that a lack of major storms has also dampened demand for building materials. Read more: Home Depot blames its recent sales slump on a major funk in the housing market: ‘Our customers are homeowners’. Industry rival Lowe’s (No. 52) also cut its full-year profit outlook, pointing to continued economic uncertainty and sluggish consumer appetite for large renovation projects.
Nvidia (No. 31)