Investors are increasingly skeptical about the sustainability of the artificial intelligence (AI) boom, as concerns about capital spending and valuations mount. According to a report from Fortune, the consensus around AI investments is beginning to fracture, with many investors at the AlphaMarket 2026 conference expressing worries about the high costs associated with AI infrastructure and the potential for a slowdown in spending.
Key Details
Morgan Stanley analysts predict that capital expenditures (capex) for AI hyperscalers will grow by nearly 100% in 2026 but will slow significantly to 14% in 2028. They emphasized that not all AI firms will be equally affected by this slowdown, and some are better positioned to maintain revenue growth despite the challenges. Nicholas Lentini, an equity strategist at Morgan Stanley, noted that the ongoing AI capex boom could still yield upward revisions in earnings for certain companies, even as overall spending moderates.
Background
The AI sector has seen capital spending rise to about 2% of U.S. GDP, up from near zero five years ago. However, analysts warn that the current level of investment may not yield immediate returns. Historical comparisons to the Gilded Age suggest that heavy concentration on a single theme, like AI today, could lead to significant market corrections, as seen during the railroad boom and subsequent bust in the 1890s.
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The concerns about slowing AI capital expenditures could impact technology stocks, particularly those tied to AI infrastructure and hyperscaler spending. Investors may see increased volatility in the shares of major tech companies, as shifts in spending priorities could affect earnings forecasts.
Watch for upcoming earnings reports from key AI players, which may provide further insights into the state of capital spending and market expectations.
Based on reporting by: fortune.com, businessinsider.com