[DigitalToday reporter Chi-gyu Hwang] Wall Street has begun taking another look at the realities of the AI business as core assumptions that have driven the AI investment boom are being shaken, Axios reported on June 7.

According to the report, investors faced four uncomfortable realities last week.

Chief executives are increasingly saying AI costs are too high, and even Microsoft mentioned that Anthropic’s model is too expensive. Research by Bain & Company says returns on AI investment are falling well short of companies’ expectations. Demand for AI infrastructure is strong, but Broadcom issued a weak earnings forecast, wiping out $440 billion in market value in just 2 days.

With the chance of the U.S. Federal Reserve raising interest rates increasing relative to a cut, financing costs for infrastructure also look set to rise.

In the meantime, the Nasdaq posted its biggest drop in 14 months. The S&P 500 fell more than 2 percent, even as most stocks in the index were actually up. Axios said the last time this happened was on April 12, 2000, when the dotcom bubble was collapsing.

Axios said, "The future of AI technology is bright, but the AI business is starting to look like a bottomless pit," adding, "The anxiety that AI costs come now and profits come later, and may never come at all, is shaking the market."