Can AI thrive if humans don’t?

Nothing – not even the news that SoftBank sold its entire Nvidia stake could spoil market sentiment yesterday, as investors bought into the optimism that the US government shutdown will finally end! Yes, after 41 days, the US government will reopen, and the data drought will come to an end.

Now, the US reopening optimism will hardly last, as the issues have not evaporated. Besides the political unease around medical care and other highly charged topics that I don’t cover, the US debt continues to rise. The legality of US tariffs is being questioned — and if the tariffs are rolled back, it could cost the US government up to $2 trillion according to Trump, pushing the national debt above the $40 trillion mark sooner than expected. Add to that the persistent Trump risks - and the highly unpredictable nature of the Trump administration - all that is expected to show up in the data as weaker jobs and maybe – but I say maybe – higher inflation.

Yesterday, ADP released a fresh set of figures, contradicting its previous print that the US economy added 42K new private jobs in October. It turns out that hiring slowed in the second half and that US companies shed more than 11K jobs on average per week in the four weeks leading up to October 25th. That complements Challenger’s data suggesting the biggest job losses since the early 2000s due to AI and  technology sihfts.

Is it a problem? It depends for whom. It’s certainly a problem for politicians, but not for investors. Investors want – and need – this data to be soft enough to justify another 25bp rate cut from the Federal Reserve (Fed) in December, which would echo positively across valuations through softer borrowing costs. And softer borrowing costs are needed to make these huge AI investments more affordable. So, yesterday’s ADP print was welcome news, along with the chaotic end of the US government shutdown.

345 companies in the S&P 500 gained and pushed the index 0.21% higher. Technology stocks lagged, allowing the equal-weight S&P500 to close the gap with the tech-heavy, market-cap-weighted one. European stock markets – which have limited exposure to tech – gained as well. The Stoxx 600 and the FTSE 100 rallied to fresh all-time highs, as luxury companies led gains on news that Chinese sales are rebounding, while the Swiss SMI jumped nearly 2% on the possibility of a lower tariff rate than the 39% currently applied to Swiss exports to the US. There’s a chance this rate could be reduced to 15%, the same as for European peers. It’s not ideal, but it would at least discourage Swiss companies from relocating to neighbouring Europe and limit the negative impact of tariffs on the Swiss economy. But I’d wait for the details before clapping.

Nasdaq 100 retreated 0.31% on news that SoftBank sold its entire Nvidia stake to fund other AI projects. It appears SoftBank is looking to boost its bets further down the AI chain — toward companies that actually use AI, like OpenAI and ABB Robotics.

For those unhappy with the circularity of current AI deals, this is good news. These are the companies that should bring real money into the ecosystem and allow it to grow beyond the seven giants that are “sending fake dollars back and forth to each other” to keep the stock rally going. So the fact that Nvidia fell 3% shouldn’t be alarming – the company and US Big Tech are now growing beyond borders. Meta, for instance, signed a deal with Dutch cloud provider Nebius, which predicted rapid growth next year – and when I say rapid, it’s rapid: their sales soared by more than 300% last quarter. Their share price? It tanked 7% yesterday, along with CoreWeave, which fell 16%.

But data centers can only do well in this environment. AMD’s data-center revenue, for example, soared from $2 billion to $16 billion between 2020 and 2025, and will likely keep growing as companies invest in AI infrastructure.

Shopping for promising names on dips demands nerves – but could pay off. But when? Alibaba’s Double 11 (Singles’ Day) sales are just over. This year, Alibaba used AI tools to personalize recommendations, automate product descriptions and optimize pricing in real time — all of which likely supported sales. For some, it worked wonders: Xiaomi, for example, sold more than $4 billion worth of products!

But what’s interesting is how AI-driven search improved performance compared to last year. According to the South China Morning Post, AI boosted “relevance for complex queries” by about 20%, increased advertising cost-effectiveness (ROAS) by ~12%, and raised click-through-rates (CTR) in certain recommendation scenarios by ~10%. These gains suggest stronger user engagement and conversion potential compared with last year’s event – when such large-scale generative-AI tools weren’t yet deployed.

But – there’s always a but – overall consumer sentiment is described as “muted” this year, and the event didn’t show a massive growth spike relative to 2024. That gives us something to think about: can AI companies truly win long-term if consumers aren’t doing well? And can consumers thrive if AI keeps stealing jobs?

I’ll leave you with that thought today.