Is the Federal Reserve the real rival of the AI bull market? Wall Street warns that interest rate hikes pose the biggest test for the market

BlockBeats News, June 8: as strong non-farm payroll data boosts market expectations for Federal Reserve rate hikes, Wall Street has started warning that what could truly end the current AI-driven bull market is not a deterioration in fundamentals, but the continued rise in funding costs.

Last Friday, the United States added 172,000 jobs in May non-farm payrolls, far exceeding market expectations, driving up expectations that the Fed will raise interest rates within the year. As a result, the Nasdaq fell more than 4% in a single day, the Philadelphia Semiconductor Index crashed 10%, recording the largest single-day drop since 2020, and the total market value of U.S. stocks evaporated by about $2 trillion.

At the same time, multiple risk indicators have continued to heat up. Goldman Sachs expects that the AI capital expenditures of Meta, Microsoft, Amazon, and Alphabet between 2025 and 2030 will reach $5.3 trillion; in Citigroup’s global bear market warning system, 10 indicators have turned red—at the highest level since the 2008 financial crisis.

The market is also concerned that as companies such as SpaceX, OpenAI, and Anthropic successively move on the capital markets, the valuation bubble of AI-related themes is further inflating. Driven by “fear of missing out” (FOMO), some technology stocks’ performance has already clearly diverged from fundamentals.

Reuters columnist Jamie McGeever pointed out that historical experience shows that economic expansions and bull markets in the stock market usually do not end on their own, but are often brought to an end by the Federal Reserve tightening monetary policy. Against the backdrop of high inflation, strong employment, and a still-loose financial environment, rising funding costs may become the biggest risk factor facing the AI boom.