Apollo warns AI hype may trigger painful market correction

Apollo’s chief economist Torsten Slok warns that AI‑driven productivity gains are lagging outside tech, creating a gap between expected earnings and reality. That mismatch could force a sharp market correction for AI‑linked stocks as valuations outpace actual ROI.

The iShares Core High Dividend ETF (HDV) is up more than 15% YTD, outpacing the S&P 500’s 9% gain. Its strong energy and healthcare holdings, plus a 2.9% dividend yield versus the index’s 1.1%, underline a shift toward income‑generating strategies.

Saudi Aramco announced an $11‑per‑barrel cut to Arab Light oil for Asian buyers in August, the deepest price reduction in 26 years. The move, tied to easing tensions in the Strait of Hormuz, signals a new price war to protect market share as global supply swells. Brent now hovers near $72 a barrel.

Mutual funds have cut the reported value of roughly 50 private software companies by an average of 20%, with some markdowns exceeding 50%. The drops reveal tens of billions of paper losses in private market portfolios and hint that AI‑driven disruptions are forcing a valuation correction.

Samsung Electronics reported 89.4 trillion won (≈$58 bn) operating profit in Q2 2026, more than the combined profit of the previous two years. The surge, driven by AI‑memory chip demand, sparked a 7.9% share drop as investors fear the AI boom may stall.

Klarna filed applications with the Utah regulator and the FDIC to launch Klarna Bank USA, an industrial bank that would let it bring payments, credit and savings services in‑house. If approved, the Swedish fintech could cut partnership costs, boost competition and offer a fee‑free, transparent banking experience to its 30 million U.S. users.

The Bank of England says AI is swelling financial‑system risks, from cyber‑attack exposure to leveraged bets on AI firms that could amplify market drops. It warns that rapid AI adoption may strain banks’ capital buffers and calls for tighter oversight to prevent a volatility spike.

A draft Treasury report warns that a slowdown in AI investing could ripple through stock markets, private credit, data‑center funding, chip makers and utilities, echoing the dot‑com bust. Analysts say the sector’s deep financing ties make the whole financial system vulnerable if AI growth stalls.

Lockheed Martin agreed to buy Ultra Maritime for $3.45 billion, adding sonar, torpedo defense and autonomous sensing tech to its Rotary and Mission Systems unit. The move sharpens the company's undersea warfare portfolio just as navies worldwide ramp up anti-submarine capabilities.

Alibaba’s Qwen models are being downloaded about a million times a day, making the open‑source suite a developer darling. Yet the e‑commerce giant can’t translate that traction into cloud‑service revenue, and analysts say it may have to shift resources to proprietary APIs to meet its $100 billion AI‑cloud goal.