"AI spending was quite hefty in 2025, and that alarmed some investors, especially going into the back half of the year. In 2026, the spending spree isn't expected to cool off, and that could cause AI bubble concerns to inflate further. Undoubtedly, higher AI spend might be causing some investors to shy away from their favorite tech stocks in the new year."
"But after a bit of pressure, I don't think throwing in the towel on the Magnificent Seven names is the right call, especially if they can offer more guidance in terms of the long-term monetization plan. Who knows? Perhaps showing evidence of improved monetization might comfort investors enough to allow for even more spending. Of course, if ROIs or expectations of longer-term ROIs fall short, the AI spending bubble could burst, and we might just see steep budget cuts across the board."
AI spending surged in 2025 and remains elevated into 2026, prompting investor concern about an expanding AI bubble. Continued heavy spending could push investors away from major tech stocks. Improved long-term monetization guidance from leading firms could reassure investors and justify sustained investment. Conversely, disappointing ROIs or lower ROI expectations could trigger a bursting of the AI spending bubble and widespread budget cuts. Executives at major tech companies and AI startups recognize both high risks and large potential gains. The AI boom appears poised to be a multi‑year trend, and strong cash flows at top firms support their resilience amid volatility.
Read at 24/7 Wall St.
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