Why Is AI Causing Market Panic – And Have Brands Over-Invested In CTV?
Last week’s stock market wobble followed renewed concern over Alphabet, Amazon and Meta continuing with aggressive capital expenditure plans in artificial intelligence. Investors are increasingly worried about whether these companies will even generate the cash flow required to sustain this spending spree, with Google announcing a 100-year sterling bond sale to raise around $20bn.
Markets were caught off guard when Alphabet revealed that AI-related capex could reach close to $200bn by 2026, compared with market estimates of around $115bn. That level of underestimation is virtually unprecedented. So why are the tech giants spending so much and how is AI expected to generate returns against investments of this scale?
Ian Whittaker, UK-based financial analyst and well-known commentator on the media and advertising sector, argues that investors backing these numbers are effectively betting that AI will fundamentally reshape how entire industries operate, likening it to the impact robotics had on car manufacturing.
The gaming sector took a hit last week after Google unveiled its Genie 3 model, which can reportedly generate games in seconds rather than years. As Whittaker put it: “If AI-powered gaming can produce titles that currently take years to develop at a fraction of the cost, it completely obliterates existing business models.” Shares in companies such as Ubisoft and EA were among those affected.
A broader market reaction followed the release of Claude’s legal plug-in, which demonstrated basic legal services available for free. Investors quickly extrapolated that this technology could be applied to other labour-intensive professional services, including accounting and advertising. Both sectors were hit hard as a result.
This, Whittaker argues, underlines a fundamental issue: financial markets simply don’t know where this is heading, and investors have little clarity on how, or when, these AI investments will be recouped. More worryingly, many appear convinced that the only way to justify the spend is by severely disrupting, or even decimating, the business models of major industries. Expect continued volatility across affected sectors this year and beyond as further investment announcements send shockwaves through the market.
One industry that AI didn’t unsettle last week, refreshingly, was television.
NBCUniversal reported record Super Bowl pre-sales, with 30-second spots selling for $10m, up from a previous high of $8m. Fox also reported strong results, with management describing it as “the most robust advertising market we’ve seen in some time,” alongside 200 new cable TV advertisers. Does this signal a renewed appetite for TV ad spend or even a return to linear?
In the US, TV advertising spend is down around $4–5bn over the past decade, so clearly most money has remained within television, shifting from linear to CTV. Given the speed and scale of that transition, it’s reasonable to question whether advertisers moved too fast, too soon.
Linear TV still delivers around 89% of all available advertising impressions across linear and CTV combined in the US. Yet over the same period, between 35–40% of TV ad spend migrated to CTV from linear. With linear viewing now stabilising at roughly 50%, a degree of rebalancing makes sense. It’s also worth remembering that while streaming accounts for around half of viewing, much of it is subscription-based or carries significantly lighter ad loads than linear television.
Finally, from the UK, Barb - the industry’s measurement JIC - responded publicly after Google prevented Barb and Kantar from reporting on YouTube viewing via TV sets. In an unusual move, Barb’s outgoing CEO published an op-ed criticising the decision, arguing that the industry loses when “truths” are not independently verifiable, reconcilable and comparable across the system.
All of these themes were discussed on the latest episode of Media Unfiltered, which you can listen to and follow here.
