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• Tech stocks slumped this week as investors’ skepticism about the AI rally overpowered another strong earnings report from Nvidia, though many experts are optimistic that earnings growth will bring investors back.

• Federal Reserve officials, meanwhile, are deeply divided about what to do at their policy meeting next month, adding uncertainty to an already anxious market.

The stock market is in limbo. It could be there for a while.

After weeks of softness in tech stocks, bulls were hoping a blowout earnings report from Nvidia (NVDA) would revive the faltering AI trade. They got strong earnings—but not the payout. Stocks sold off Thursday as the Cboe Volatility Index (VIX), or the “Fear Index,” jumped to its highest level since April’s tariff debacle.

Stocks rebounded on Friday, but many of Wall Street’s favorite AI stocks—Nvidia, Broadcom (AVGO), Palantir (PLTR), Oracle (ORCL), and Vistra (VST)—fell yet again, indicating AI sentiment remains in the dumps. And market experts are now trying to navigate the road ahead after a week of confusing signals and volatile action.

Tech stocks have fueled the bull market of the past three years, and will have a big impact on market sentiment and stock performance going forward. The Federal Reserve’s interest rate decision next month will also be pivotal in setting a direction for stocks.

The AI rally has been imperiled before. Tech stocks slumped in July 2024 amid concerns about over-investing in AI, but they found their footing and moved higher through the end of the year. Overspending fears resurfaced in January when Chinese startup DeepSeek burst onto the scene. That setback, too, was short-lived.

“We are going through another ‘DeepSeek Moment,’” wrote Wedbush analyst Dan Ives, one of Wall Street’s ardent tech bulls, on Friday. Ives compared today’s AI bubble debate to historical examples of tech skeptics getting it wrong, like dismissals of the iPhone in 2008 and Microsoft’s pivot to cloud computing in 2014.

“This AI Revolution is just beginning today,” he wrote. “We believe tech stocks and the AI winners should be bought given our view this is Year 3 of what will be a 10-year cycle.”

“The big risk to the tech sector—and thus the broader equity market—is not a sudden collapse in valuations,” wrote Barclays analyst Ajay Rajadhyaksha on Thursday. “It is that earnings—which have been on [an] absolute roll over the last 3 years—suddenly start to disappoint, which then sparks an exodus.”

Rajadhyaksha doesn’t think such an outcome is likely, though he concedes there are AI-related risks that investors should keep an eye on. Tech companies are increasingly turning to credit markets to finance their AI investments, which, until recently, have been funded primarily by cash flows. That increases the wider economy’s exposure to the AI boom, and adds to tech’s interest-rate sensitivity. Power constraints, he said, could also force a slowdown in AI spending, possibly dealing a blow to “picks and shovels” suppliers like Nvidia.

“A major change in market leadership appears unlikely absent a significant dislocation in the macro environment,” concludes Rajadhyaksha.

The Federal Reserve’s December policy meeting could be another overhang that keeps stocks wayward in the next few weeks. Policymakers appear deeply divided on how aggressively to lower interest rates. Some see in signs of a weakening labor market good reason to cut rates despite evidence inflation is ticking higher. Their hawkish counterparts say economic uncertainty urges caution. The government shutdown has left behind gaps in official data.

Yesterday’s September jobs report—the last snapshot of the labor market Fed officials will see before their meeting begins Dec. 9—sent conflicting signals. The U.S. added more jobs than expected, but the unemployment rate rose to its highest level in four years. Deutsche Bank economists on Thursday called the report a Rorschach test that gives each camp within the Fed plenty of ammunition to make its case.

Experts say that the Fed’s rate decisions could be decisive in renewing or extinguishing the AI rally. Rate cuts, they argue, would likely fuel the rally by injecting liquidity into the market. If rates remain where they are, tech stocks could struggle to regain their momentum.

Investors are highly uncertain about the Fed’s next steps. Futures market data has the odds of a December rate cut, considered a near certainty a month ago, below 40% yesterday. Those odds jumped back to 70% on Friday after one official indicated he was open to cutting next month.

“In a vacuum of unclear rate and labor-market signals, markets are prone to exaggerated volatility, with short-term trading dominated by sentiment and technical structure,” wrote Bitunix analysts.

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In the “Midwest Region” category, the firm served as bond and disclosure counsel to the Columbus Regional Airport for its approximately $1.21 billion issuance of AMT and non-AMT airport revenue bonds as its inaugural issuance to support a $2 billion capital program at John Glenn Columbus International. The transaction generated $4.11 billion in orders from 88 investors, expanding demand for AMT paper and allowing the Authority to advance $175 million of additional projects.

The Squire Patton Boggs team was led by public and infrastructure finance partner Christopher J. Franzmann.

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The Squire Patton Boggs team was led by global head of transportation infrastructure finance and public and infrastructure finance partner Alethia N. Nancoo and public and infrastructure finance practice group leader and partner Catherine Z. Romanchek.

In the “Public-Private Partnership Financing” category, the firm represented a consortium comprised of ACS Infrastructure, Acciona, and Meridiam for the Georgia SR 400 Express Lanes Project, which combined a record issuance of tax-exempt AMT bonds, the largest TIFIA loan to date, and a 50-year concession that delivered a $3.8 billion upfront concession fee to the State of Georgia while funding 16 miles of dynamically tolled lanes and future bus rapid transit improvements. The multibillion-dollar transportation project aims to improve safety, reduce congestion, and support multimodal mobility across metro Atlanta.

The Squire Patton Boggs team was led by public and infrastructure finance counsel Gregory V. Johnson, Denver managing partner and environmental, safety and health global chair Peter S. Gould, and public policy partner Austin Harrison.

“With a century-long tradition at the forefront of public finance, Squire Patton Boggs has uniquely positioned itself as a market leader, providing trusted bond counsel opinions,” said Ms. Romanchek. “Our diverse and innovative engagements showcase the strength of our Public & Infrastructure Finance team’s deep bench of talent and expertise, as well as the breadth of our national practice spanning more than a dozen offices. We are proud to contribute to projects that are shaping the municipal finance market and driving growth in the American economy.”

The 2025 Deal of the Year Awards will be held on December 2 at Guastavino’s in New York City. All award winners are also finalists for the national Deal of the Year award, which will be announced at the close of the gala. Click here to view The Bond Buyer’s full list of honorees (subscription required).