Investors are falling out of love with AI
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Illustration: Aïda Amer/Axios
The stock market has surged on AI news for the last few years. Now the dynamic is changing.
Why it matters: There's growing unease around the AI boom, and it's showing up in the stock market, investor surveys and among regular Americans.
Driving the news: A record share of investors — 35% — say companies are spending too much on AI, per a new Bank of America global fund manager survey out Tuesday.
- Meanwhile, 54% of Americans surveyed over the past week think that companies are investing too much in AI, per YouGov/The Economist. A majority also don't trust AI and believe it will eliminate jobs.

The big picture: AI spending had been the backbone of the tech-led bull market.
- Typically, when a U.S. tech firm announced an increase in AI-related spending, its stock price went up, says Elyas Galou, a senior global investment strategist at Bank of America.
- Now, these announcements are leading stock prices down. "From headwind to tailwind," he says.
How it works: In its earnings report in early February, Amazon said it plans to spend $200 billion on capital expenditures this year, up 60% from 2025.
- Since then, its stock price has fallen nearly 16%.
- Meanwhile, Microsoft's stock is down nearly 9% since its earnings report in late January, outlining $37.5 billion in capital expenditures in its most recent quarter, an increase of 65% from the previous year.
- At the same time, AI fear has swept through a handful of industries, most dramatically in software.
Between the lines: All the spending on AI infrastructure means less money for stock buybacks, Galou notes.
- And buybacks have effectively driven the stock market higher since the financial crisis, he says.
Where it stands: Meta, Amazon, Microsoft and other hyperscalers are still spending record amounts on AI.
- This week, Morgan Stanley raised its forecast of hyperscaler capex in 2026 to $740 billion, up from $570 billion just a couple months ago.
- Why? "Demand for compute continues to exceed supply by a wide margin," equity analysts at the bank wrote in a weekend note.
- In other words, these tech companies need more processing power and energy to train and run AI models.
What to watch: "We think the next leg will certainly be one of the big AI hyperscalers announcing a capex cut."
