Mumbai, July 28 -- The United States could face "massive capital destruction" from its artificial intelligence (AI) investment boom as Chinese open-source AI models increasingly challenge the dominance and profitability of US hyperscalers, according to a report by Jefferies.

The brokerage said investors are beginning to question whether the hundreds of billions of dollars being spent on AI infrastructure by major US technology companies will generate adequate returns, particularly as cheaper Chinese large language models gain market share.

"GREED & fear's base case has always been that the most likely longer-term outcome of the AI story in market terms will be massive capital destruction in the US with market share going to cheaper open...