Investors in the technology sector are conducting a deep evaluation of their artificial intelligence (AI) investment portfolios. This move comes amid concerns that a massive surge in infrastructure spending could pressure profit growth and the stock valuations of major tech companies in the global market.
Although market demand for AI services continues to show a positive trend, analysts from ING note risks arising from increased capital expenditure (capex). Rising depreciation costs are expected to slow down earnings per share (EPS) growth and limit companies' ability to execute corporate actions such as share buybacks, which have historically been the main engine supporting equity valuations.
Market dynamics throughout the first half of 2026 reflected quite high volatility. Notably, companies like Microsoft and Oracle experienced significant stock price pressure, declining by 20% and 27% respectively. This phenomenon underscores market anxiety regarding the certainty of long-term returns from highly capital-intensive AI investments.
On the other hand, tech giants maintain the argument that current infrastructure spending remains economically justified. For instance, Microsoft is able to allocate around $65 billion for cloud and AI infrastructure, while its annual revenue from this segment reaches $37 billion. Strong operating cash flow is considered sufficient to support these grand ambitions.
However, future challenges remain. The in-house AI chip development strategies of companies like Amazon, Google, and Microsoft are predicted to intensify competition for chipmakers like Nvidia. Investors are now looking for tangible proof in the form of profit margin expansion capable of offsetting the massive investment burdens incurred today.
