Wall Street on Edge as Big Tech's $650B AI Spending Raises Bubble Fears

This article was prepared from the source material provided, which includes a Bank of America survey, statements from Sundar Pichai and Jensen Huang, and a quote from Ben Preston of Orbis Investments as reported by the Financial Times.

Big technology companies are on track to spend a record-breaking $650 billion on artificial intelligence infrastructure in 2026, a commitment that has left Wall Street increasingly uneasy about the prospect of an AI bubble.

Amazon's share price dropped sharply earlier this month after the company announced plans to spend $200 billion this year on AI. Microsoft's shares also fell after the company stoked fears that a return on AI investment may be further off than expected.

Those concerns are reflected in a new Bank of America survey of 162 fund managers. A significant 35 percent said corporations are overinvesting in capital expenditures — funds used to acquire, upgrade, and maintain physical assets — marking a record proportion compared with previous survey results spanning the last 20 years. Only 20 percent approved of increasing capital expenditures.

A full 25 percent of respondents identified the AI bubble as the largest risk, more than inflation and geopolitical conflict. And 30 percent said AI expenditures were the most likely source of a credit crisis.

The survey results paint a dire picture of a market where big tech companies continue to spend tens of billions of dollars each quarter, prompting warnings that they may be spreading themselves too thin.

Tech Leaders Defend Spending as 'Transformational'

Meanwhile, tech leaders continue to justify their enormous spending. Google CEO Sundar Pichai touted the present moment as "extraordinary" and "transformational" during the AI Summit in New Delhi, India, on Wednesday, comparing the AI boom to the industrial revolution, "but ten times faster and ten times larger."

Nvidia CEO Jensen Huang also attempted to calm spooked investors this week, arguing AI investments are just the beginning.

But analysts remain far less convinced. "I would say clients are justified in being worried [about an AI bubble] because there's a lot of uncertainty," Orbis Investments advisor Ben Preston told the Financial Times.

The divide between tech leaders' optimism and investor anxiety leaves open the question of whether the massive spending will eventually pay off or become a cautionary tale of overinvestment.