In this photo illustration, a smartphone displays the Paramount Skydance logo in front of a blurred Warner Bros. Discovery emblem, on December 6, 2025, in Chongqing, China. (Photo illustration by Cheng Xin/Getty Images)
(NEW YORK) — Paramount said Monday it is making a bid to acquire Warner Bros. Discovery, swooping in just days after Netflix announced a $83 billion deal to purchase a large part of the media giant.
Warner Bros. Discovery (WBD) shareholders would be offered $30 per share, which represents a 139% premium to the stock price as of Sept. 10, 2025, Paramount said.
“Our public offer, which is on the same terms we provided to the Warner Bros. Discovery Board of Directors in private, provides superior value, and a more certain and quicker path to completion,” David Ellison, chairman and CEO of Paramount, said in a statement. “We believe the WBD Board of Directors is pursuing an inferior proposal which exposes shareholders to a mix of cash and stock, an uncertain future trading value of the Global Networks linear cable business and a challenging regulatory approval process. We are taking our offer directly to shareholders to give them the opportunity to act in their own best interests and maximize the value of their shares.”
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(NEW YORK) — Fears of an artificial intelligence bubble have rattled the stock market in recent weeks and set off concern among critics about a wider risk to the U.S. economy.
A surge of AI spending accounted for roughly two-thirds of gross domestic product growth over the first half of 2025, JPMorgan Asset Management found, outpacing the contribution made by hundreds of millions of U.S. consumers. Many of the nation’s largest companies have poured funds into the chips and data centers necessary to operate AI.
A central question looms over the fate of the technology and the trillions of dollars being spent to develop it: Will AI deliver the type of profits that could turn the product into a moneymaker?
Proponents say a lag between the buildout of AI infrastructure and an onrush of gains is to be expected, pointing to a similar lull after the introduction of other watershed technologies, such as the internet. The widespread adoption of products like OpenAI’s ChatGPT has revealed a massive potential customer base, they add, noting AI firms have prioritized product development over profits.
Critics, however, say the considerable costs have put pressure on AI to deliver stratospheric profits, but little evidence suggests businesses or everyday users will get enough value to warrant forking over a mountain of cash. The technology must deliver within years rather than decades, they add, since the current level of spending cannot be sustained.
“It’s not particularly unusual for a market at this early stage to not be making much profit,” Paul Kedrosky, a venture capitalist and research fellow at MIT’s Institute for the Digital Economy, told ABC News. “Of course, the difference is most markets at this stage aren’t also spending a trillion dollars.”
AI boosters and skeptics alike have raised alarm about the economic stakes. “A reversal would risk recession. We can’t afford to go backwards,” David Sacks, a venture capitalist and White House czar for crypto and AI, said in a post on X on Monday.
Gary Marcus, a professor emeritus at New York University and author, who often criticizes hype surrounding AI, said in a Substack post in September: “It’s not going to be pretty when the music stops.”
A “bubble” is a term used to describe a market in which an asset’s price far outpaces its value on the market. Questions centering on the productivity gains and profitability of AI take up the task of assessing the economic value of the new technology.
Chip giant Nvidia has delivered major profits selling the semiconductors behind AI, becoming the most valuable company in the world by market capitalization. Such success indicates appetite for the building blocks of AI rather than its end uses, however.
For now, AI has failed to achieve gains on a scale near its immense costs, some analysts said. A product like AI would typically generate revenue in the form of sales either direct to consumers or to third-party businesses using the technology to enhance their offerings. AI has faced challenges on both fronts, some analysts said.
Roughly 95% of businesses invested in AI have failed to make money off of the technology, an MIT study in July found, estimating the combined amount spent by the firms is around $40 billion.
“Despite high-profile investment, industry-level transformation remains limited,” the study said.
Consumer-driven profits have also proven elusive. OpenAI’s ChatGPT, for example, boasts about 800 million weekly active users, making it one of the fastest-growing apps ever. That user base makes up about a quarter of the 3 billion monthly active users combined on the array of apps offered by Meta, a company that generated more than $50 billion over a recent three-month period. But OpenAI’s sales do not come close.
OpenAI CFO Sarah Prior told CNBC in September the company is on pace to earn about $13 billion in revenue over the course of 2025, which amounts to $3.25 billion per quarter. On the BG² podcast earlier this month, OpenAI CEO Sam Altman said the company is generating “well more revenue than that.”
Revenue is “growing steeply,” Altman added. “We are taking a forward bet that it will continue to grow, and that not only will ChatGPT keep growing, but we will be able to become one of the important AI clouds, that our consumer device business will be a significant and important thing, that AI that can automate science will create huge value.”
Some analysts said the rapid adoption of chatbots underscores the usefulness of the technology, noting that it paves the way for a potentially significant revenue stream if firms were to populate the AI assistants with advertisements or charge for access.
“It’s the fastest adoption of basically any consumer technology that we know about,” Ethan Mollick, a professor of management at the University of Pennsylvania who studies AI, told ABC News. “There is a path to making money.”
Arun Sundararajan, a professor of entrepreneurship at New York University, said a delay in uptake from businesses is to be expected for a potentially paradigm-shifting technology like AI.
“It’s true that we haven’t yet seen evidence of significant productivity gains from AI investments, but I’m not surprised,” Sundararajan said. “At the early stages of the rollout of a technology like this, there’s a lot of experimentation and learning.”
“As businesses start to understand how to fundamentally change the way that they work using this technology, that’s when you start to see the big productivity gains,” Sundararajan added.
Other analysts disagreed about the likelihood of profits, pointing in part to the challenge posed by infrastructure costs associated with AI.
For many digital products such as software or smartphone apps, the profitability owes to the relatively low cost of providing the service on a massive scale, Kedrosky said. For instance, the initial cost burden of developing a website is significant, but once completed, a website can reach millions of users with little extra cost.
For AI, however, the energy and computational costs increase in proportion to a given number of chat prompts or users, meaning the technology lacks such low-cost scalability.
“Every time you prompt an AI model, it eats up costs to maintain and cool servers. Those costs rise with the number of users. That’s a problem,” Kedrosky said.
The scale of investment also places pressure on AI companies to deliver major profits within a limited timeframe, since the current level of financing cannot continue into perpetuity, Andrew Odlyzko, an emeritus University of Minnesota mathematics professor who focuses on financial bubbles, told ABC News.
“The problem is when you talk about investments in data centers in the trillions of dollars and do the basic financial arithmetic of how much revenue you have to bring in to justify that, it gets into figures larger than total revenues of Google,” Odlyzuko said.
To be sure, some analysts said the technology remains in an early stage of its development, making the outcome uncertain.
“We’re in the early innings,” Vasant Dhar, a professor of data science at New York University who believes AI will ultimately deliver significant profit, told ABC News. “It remains to be seen what form it will take.”
(NEW YORK) — Online shoppers set a record high on Thanksgiving, paving the way for gangbusters performance on Black Friday, Adobe data showed.
Digital spending on Thanksgiving jumped 5% from a year earlier, totaling $6.4 billion and exceeding Adobe’s expectations, the firm said.
The company also expects Black Friday shoppers to set a new record, outpacing last year’s total by more than 8%.
Adobe attributed the strong performance on Thanksgiving to better-than-anticipated discounts, especially for electronics. Discounts also touched an array of products from furniture to appliances to toys.
“Given the strength of Thanksgiving deals, Adobe is adjusting its discount forecast for the big shopping days coming up,” Adobe said in a statement to ABC News. “Deals are now expected to be on par with the elevated levels seen in the last holiday shopping season.”
A surge in the popularity of AI retail assistants also contributed to the nationwide shopping spree, Adobe said. AI-driven traffic to online sellers soared 725% compared to last year, the firm said, stemming primarily from chatbots designed to aid consumers.
Shoppers who arrived at a retail website from an AI service were 54% more likely to make a purchase than those who did not, Adobe said.
“The magnitude of discounts was the big story on Thanksgiving yesterday, as retailers leaned into delivering great deals to drive consumer demand online,” Vivek Pandya, lead analyst at Adobe Digital Insights, told ABC News in a statement.
“This was further propped up by impulse-led mobile shopping and the use of generative AI which assisted shoppers in locating the best deals, two trends that helped deliver higher-than-expected overall spend on Thanksgiving,” Pandya added.
The early returns for the holiday shopping season arrive at a wobbly moment for the U.S. economy.
Inflation has picked up in recent months, putting price increases a full percentage point above the Fed’s target of 2%. Meanwhile, hiring has slowed, posing a risk of an economic double-whammy known as “stagflation.”
Alongside those headwinds, consumer spending among middle- and low-income Americans has slowed, triggering warnings from restaurant giants such as McDonald’s and Chipotle. A report this month showed consumer sentiment has fallen to its lowest point since a peak of pandemic-era inflation in 2022, University of Michigan data showed.
Retailers hope shoppers defy these trends over the holiday season, when spending typically surges. The outcome could hold significant stakes for the wider economy, since consumer spending accounts for about two-thirds of U.S. economic activity.
(NEW YORK) — Blockbuster earnings from chip giant Nvidia this week appeared to rebuke concerns about an artificial-intelligence bubble, briefly ending a days-long slump in the stock market.
“It’s fair to say that Nvidia’s results have completely changed the market mood and pushed out any bubble fears for another day,” said Jim Reid, a research strategist at Deutsche Bank, in a memo to clients early Thursday morning, just hours after the earnings.
But the market went on to offer little reassurance. Shares of Nvidia fell almost 3% in the first post-earnings trading session. The major stock indexes also dropped, underscoring the importance of the technology for Wall Street and the overall economy, which have both come to rely on massive AI spending to propel growth.
Nvidia recorded $57 billion in sales over three months ending in October, the company said on Wednesday, setting a quarterly sales record and demonstrating near-bottomless demand for the semiconductors at the heart of AI.
Still, critics say such appetite for the building blocks of AI has far outpaced the technology’s end uses and financial returns. AI hasn’t delivered much profit, they argue, despite up-front costs totaling hundreds of billions of dollars spent on data centers and chips.
Proponents strongly disagree, pointing to the rapid adoption of products like ChatGPT and counseling patience as other uses of the technology take hold. To hear them tell it, AI is set to augur a tech transformation like the internet or electricity, meaning the hype will ultimately bear out even if some firms falter along the way.
“There is no question that Nvidia will make a bunch of money,” Gary Marcus, a professor emeritus of psychology and neuroscience at New York University, who specializes in AI, told ABC News. “There are many questions about where the market is headed after this initial burst of enthusiasm.”
For his part, Nvidia CEO Jensen Huang rejected AI-related worries during an earnings call on Wednesday.
“There’s been a lot of talk about an A.I. bubble,” Huang said. “From our vantage point, we see something very different.”
The economy is undergoing a technological sea change that extends beyond generative AI, Huang said, noting the rise of advanced software such as cloud computing as well as AI-driven physical products — all of which increasingly run on Nvidia chips.
“Nvidia corporation is unlike any other accelerator,” Huang added.
AI spending is expected to total $375 billion this year, jumping to about $500 billion by the end of 2026, UBS Global Wealth Management found in August. For reference, the half-trillion to be spent on AI next year would be roughly equivalent to the gross domestic product of Singapore.
The AI boom has helped propel U.S. economic growth. Such spending added a 0.5 percentage point boost to annualized U.S. GDP growth over the first half of 2025, accounting for about one-third of economic activity, Pantheon Macroeconomics said.
But analysts fearful of an AI bubble warn of what they consider immense costs, saying energy needs and chip production have saddled the balance sheets of firms developing and operating AI models. Profits may not come for years, if at all, they warn. OpenAI said it expects to begin generating substantial profits in 2030.
Speaking to reporters earlier this year, OpenAI CEO Sam Altman acknowledged frenzied investor enthusiasm but signaled confidence about the long-term outlook for the industry.
“When bubbles happen, smart people get overexcited about a kernel of truth,” Altman said. “Are we in a phase where investors as a whole are overexcited about A.I.? My opinion is yes. Is A.I. the most important thing to happen in a very long time? My opinion is also yes.”
Tech giants like Amazon and Google retain the capacity to spend without taking on sizable debt, but smaller players require loans, risking credit defaults if the technology fails to deliver on the up-front costs, Marcus said. The potential unpaid loans could strain banks and put pressure on the wider financial system, he added.
“A big question is how much the banks have been propping this up: What will the blast radius be?” Marcus said.
Proponents of AI say such worries are overblown. They point to the popularity of products like AI chatbot ChatGPT, which boasts about 800 million weekly users. Millions of additional users avail themselves of xAI’s Grok, Google’s Gemini and Meta’s MetaAI.
Last year, Apple unveiled AI-fueled tools for its iPhones, Mac and iPad. Some firms are developing a new wave of AI-equipped robots to perform tasks in people’s homes and in workplaces like logistics and warehouses.
“This is the fastest adoption of any technology by consumers by far,” Lynn Wu, a professor of operations, decisions and information at the University of Pennsylvania, told ABC News. “This is a general purpose technology that will be adopted everywhere.”
The profitability of the technology will be made apparent over time as consumers and businesses identify its best uses, Wu added.
“When a general purpose technology — like electricity or the internet — is being adopted, firms and people don’t know how to use it,” Wu said. “We haven’t envisioned how to use this paradigm yet.”
Still, Wu cautioned, an AI bubble likely exists, though it isn’t dangerous. Wu compared the current state of the industry to the internet era before the dot-com bubble, when a host of firms went belly up but the technology reoriented the economy and established corporate giants.
“If you ask me flat out — yes or no — are we in a bubble? The answer is yes,” Wu said. “But the bubble isn’t necessarily a bad bubble.”
