Investors are growing increasingly cautious about the stock market’s AI-driven rally as calls from industry leaders to slow the pace of AI development raise fresh questions over the huge spending underpinning the sector.
The concern comes as technology giants are expected to spend nearly US$800 billion on AI infrastructure in 2026, with Wall Street watching closely for any signs that the investment boom could lose momentum.
Chuck Carlson, chief executive officer at Horizon Investment Services, said investors would need to see tangible evidence before concluding that AI spending was slowing.
“This becomes a problem if in fact you see orders being cancelled, you see data centers, construction deals being cancelled,” he said. “I need to see something concrete that, in fact, there is a slowdown versus just talk.”
The latest unease follows calls from AI leaders including Anthropic CEO Dario Amodei for companies to slow the rate of advancement and allow more time to address the risks associated with increasingly powerful AI systems.
A slowdown involving leading AI developers such as OpenAI and Anthropic could also raise questions over their valuations, particularly as both companies are expected to eventually sell shares to the public.
With the companies potentially becoming publicly owned, Carlson said “shareholders are going to be demanding of them to continue to grow”.
AI Capex Winners Take The Hit
The AI spending boom has been a major driver of corporate profits and stock market gains. The S&P 500 has risen more than 11% so far this year, while the AI hyperscalers Microsoft, Alphabet, Amazon, Meta Platforms and Oracle are expected to spend around US$795 billion on capital expenditure in 2026 and nearly US$1.08 trillion in 2027, according to BofA Global Research.
Semiconductor companies, which have benefited heavily from this spending, bore much of the selling pressure on Monday. The Philadelphia SE Semiconductor Index remains up nearly 60% in 2026 despite the recent decline.
“Markets are punishing the picks-and-shovels layer harder than the hyperscalers because it’s the layer most exposed to a slowdown in the rate of capability improvement,” said Erik Kratz, chief investment officer and co-head of wealth at Arena Private Wealth.
Still, Kratz said greater scrutiny of AI safety could eventually benefit the industry if it creates clearer rules around future investment.
“The buildout doesn’t stop because the CEOs asked for guardrails. If anything, a credible safety framework makes the long-duration capex easier to underwrite.”
AI Doubts Meet A Tougher Market
The latest concerns have brought back memories of the market selloff in early 2025 following the emergence of China’s DeepSeek AI model, which prompted investors to question whether billions of dollars of planned AI infrastructure spending could be justified. That episode ultimately proved to be a short-lived setback for the AI trade.
Investors are now weighing a wider range of risks, including the possibility of tighter government regulation. US President Donald Trump said on Monday that concerns over AI safety were “a hoax” and played down the need for regulation.
“The real risk isn’t that development actually slows — it’s regulatory overreaction,” Kratz said.
Michael Bruun, global co-head of private equity at Goldman Sachs Alternatives, said investors were assessing “more or less regulation, whether it’s more or less geopolitical tension, whether there are new paradigms on the technology side emerging.”
Despite the uncertainty, Bruun said there were still opportunities to deploy capital “into the epicenter of AI”.
The stakes are high for the broader market, with both the S&P 500 and Nasdaq Composite sitting around 2% below their record highs while investors also contend with higher bond yields, rising oil prices and the possibility of a Federal Reserve interest rate hike this week.
“AI semiconductor and infrastructure stocks have long priced in an uninterrupted capex boom, leaving virtually zero margin of error for an industry-imposed speed limit,” said James Humphries, managing partner at Mindset Wealth Management.
“If the market is already staring down stickier-than-expected inflation and a murky Fed rate path, cutting off the market’s primary growth engine leaves the broader indices completely exposed to those macro headwinds.”
Reuters
