"Investors have been rattled by the enormous amount of money AI companies are committing to spend on infrastructure buildouts. Amazon alone saw its share price drop precipitously earlier this month after announcing that it's planning to spend $200 billion this year on AI. Microsoft's shares also plummeted after stoking fears that a return on AI investment may be even further off than expected."
"Fears over an AI bubble continue to grow as analysts warn that companies are massively overinvesting. According to a new Bank of America survey of 162 fund managers, a significant 35 percent said corporations are overinvesting in capital expenditures - funds used by a company to acquire, upgrade, and maintain physical assets - at a record proportion compared to previous survey results spanning the last 20 years. Only 20 percent said they approved of increasing capital expenditures."
Investors reacted negatively to massive AI infrastructure spending, with Amazon's share price falling after announcing a $200 billion AI spend and Microsoft shares also declining amid ROI concerns. Big tech firms are forecast to spend $650 billion on AI in 2026. A Bank of America survey of 162 fund managers found 35% believe corporations are overinvesting in capital expenditures, while only 20% supported increasing such spending. Twenty-five percent of respondents identified an AI bubble as the largest risk, and 30% said AI expenditures were the most likely source of a credit crisis. Tech leaders defended the spending; Sundar Pichai called the moment 'extraordinary' and 'transformational,' and Nvidia's CEO attempted to calm investors.
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