There are major AI deals every day, Goldman Sachs traders say: The market is clearly "tired."

There are major AI deals every day, Goldman Sachs traders say: The market is clearly "tired."

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Despite Nvidia's record-setting single-day market value surge of $245 billion, signs of fatigue toward the AI trading frenzy are emerging in the market. Peter Bartlett, a Goldman Sachs Technology, Media & Telecom (TMT) trader, warned that market participants are already feeling clear fatigue in the face of seemingly endless new AI deals, partnerships, and investments.

On October 28 alone, Nvidia announced more than 15 major partnerships, ranging from a $1 billion equity investment in Nokia to strategic collaborations with Microsoft, OpenAI, Eli Lilly, Uber, and other companies. These announcements pushed up Nvidia and Microsoft's stock prices, adding $245 billion and $80 billion in market value respectively, while the Nasdaq 100 Index and the Philadelphia Semiconductor Index both hit record highs.

However, Goldman Sachs trader Bartlett pointed out that in contrast to stock performance, skepticism about these deals is building up in the market, with the issue of "circular investment" becoming the biggest concern. Although Nvidia CEO Jensen Huang denied any AI bubble concerns in his keynote speech at the GTC conference that day, saying the company has $500 billion of visible revenue, this has not completely alleviated market doubts.

Notably, the S&P 500 closed at a record high that day, but 398 stocks in the index declined, setting a record for the highest number of decliners when the index closed at a historic high. The divergence between the equal-weighted S&P 500 and the market-cap weighted index reached a historic level, highlighting that gains in the market are concentrated among a handful of AI-related giants.

Single-day AI Trading "Feast": A Wave of Partnerships Led by Nvidia

October 28 can be called a "trading day" for the AI sector. According to Bartlett, some of the major announced deals were expected, but many surprised the market.

The day began with Microsoft and OpenAI announcing details of their new partnership agreement, and Nvidia announcing a $1 billion equity investment in Nokia. Nokia's stock price soared 23%, adding $10 billion in market value. Afterwards, Nvidia's partnership announcements kept coming.

PayPal partnered with OpenAI to expand payment and business functions in ChatGPT, causing its stock to rise 4% and its market value to increase by $3 billion.

Cybersecurity company CrowdStrike partnered with Nvidia to develop AI agents, causing its stock to rise 3% and its market value to increase by $5 billion. Oracle partnered with Nvidia to build an AI supercomputer for the U.S. Department of Energy, with its stock remaining flat.

Other companies that announced collaborations with Nvidia include:

Uber (expanding mobile networks), Eli Lilly (building an AI supercomputer), Super Micro (expanding government solution partnerships), Lucid (delivering L4-level autonomous driving EVs), Palantir (operationalizing AI decision-making), HPE (AI factory innovation), Zoom (federal AI architecture), ServiceNow (expanding intelligent workflows), Flex (deploying hyperscale AI factories), Check Point (AI factory security solutions), Pure Storage and Cisco (enterprise AI factories), etc.

In addition, Booz Allen, Cisco, MITRE, ODC, and T-Mobile also announced partnerships with Nvidia. Adobe announced an expanded strategic partnership with Google Cloud on the same day, while CoreWeave expressed intentions to enter the US federal market to provide AI cloud services to government agencies.

Stock Surge Can't Hide Market Doubts

These announcements had a significant impact on stock prices. Nvidia rose 5% with a single-day market cap increase of $245 billion; Microsoft rose 2%, adding $80 billion in market value.

Bartlett from Goldman Sachs said this phenomenon is particularly notable, because the market is currently ignoring solid earnings performances but continues to react positively to AI-related news.

But Bartlett warned that despite these strong stock performances—Nvidia, the Philadelphia Semiconductor Index, and the Nasdaq 100 Index all hit new highs—he has observed that skepticism around these deals seems to be accumulating in the market, with "circular investment" becoming the principal source of concern.

"Circular investment" refers to the phenomenon of companies within the AI ecosystem investing in and purchasing from each other, a model that has triggered worries about the sustainability of revenues and the authenticity of demand.

Jensen Huang rebutted the AI bubble argument in his speech that day. According to a Wallstreetcn article, Huang emphasized that Nvidia will have $500 billion in visible revenue from the Blackwell and Rubin product lines by fiscal year 2026. But this statement did not completely dispel market concerns.

Bartlett bluntly stated that Nvidia and OpenAI are setting themselves apart from other AI players, dominating most deal activity, but this intense pace of transactions is causing market participants to feel exhausted.

The Goldman Sachs trader pointed out that escalating internal market differentiation confirms this observation. The S&P 500 closed at a historic high, but 398 constituent stocks fell, a record for the number of stocks to decline when the S&P 500 was at a record high. The divergence between the equal-weighted and market cap-weighted S&P 500 indices reached a historic level, indicating that gains are highly concentrated among a few AI giants.

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