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Investors are pushing back hard on stock prices tied to artificial intelligence as doubts rise over how long the frenzy can run.
Three years after ChatGPT kicked off the boom, the market is now dealing with a mix of big spending, slowing growth, and fear that the gains have outpaced reality.
Nvidia’s recent drop, Oracle’s sharp fall after heavy AI costs, and weakening sentiment around companies linked to OpenAI are all feeding that tension. The question heading into 2026 is whether money should pull back before a bubble cracks or stay in place for one more run.
“We’re in the phase of the cycle where the rubber meets the road,” Jim Morrow of Callodine Capital Management said. “It’s been a good story, but we’re sort of anteing up at this point to see whether the returns on investment are going to be good.”
Investors are uneasy about how AI will be used, the massive cost to build it, and whether users will actually pay for it. Those answers will shape how the market moves next.
The S&P 500’s three-year, $30 trillion climb leaned heavily on Alphabet, Microsoft, Nvidia, Broadcom, and Constellation Energy. If they slow, the whole index feels it.
“These stocks don’t correct because the growth rate goes down. These stocks correct when the growth rate doesn’t accelerate any further,” Sameer Bhasin of Value Point Capital said.
Tracking capital flows hits AI builders
OpenAI plans to spend $1.4 trillion in the coming years while bringing in far less revenue than costs.
Reports say it could burn $115 billion through 2029 before reaching positive cash flow in 2030. It has raised $40 billion, including money from SoftBank, and Nvidia pledged up to $100 billion in September, a move that has sparked talk of circular financing because the chipmaker is investing in customers who also buy its hardware.
If investors refuse to commit more money, pressure will spread to companies connected to OpenAI, including CoreWeave.
“If you think about how much money — it’s in the trillions now — is crowded into a small group of themes and names, when there’s the first hint of that theme even having short-term issues or just valuations get so stretched they can’t possibly continue to grow like that, they’re all leaving at once,” Eric Clark of the Rational Dynamic Brands Fund said.
Oracle is one of the firms relying on outside financing. Its shares climbed as cloud bookings jumped, but building data centers needs heavy cash, so the company issued tens of billions in bonds. Debt adds pressure because bondholders expect cash payments, not rising share prices.
Oracle’s stock took a hit Thursday after it reported much higher capital spending and slower cloud growth. A report a day later about delays in OpenAI-linked data centers sent the shares down again. A gauge of its credit risk reached the highest level since 2009.
An Oracle spokesperson said the company remained confident in meeting its plans. “The credit people are smarter than the equity people, or at least they’re worried about the right thing — getting their money back,” said Kim Forrest of Bokeh Capital Partners.
Watching Big Tech spending reshape balance sheets
Alphabet, Microsoft, Amazon, and Meta are set to spend more than $400 billion on capital projects in the next year, mostly data centers.Revenue tied to AI is growing but nowhere close to those costs.
“Any plateauing of growth projections or decelerations, we’re going to wind up in a situation where the market says, ‘Ok, there’s an issue here,’” said Michael O’Rourke of Jonestrading. Earnings growth for the seven biggest tech names — Apple, Nvidia, Tesla included — is expected to slow to 18% in 2026.
Depreciation from the data center surge is rising fast. Alphabet, Microsoft, and Meta reported about $10 billion in depreciation in late 2023, then $22 billion in the September quarter.
Estimates show that number hitting $30 billion next year. That strain will affect buybacks and dividends. Meta and Microsoft are expected to have negative free cash flow after shareholder returns in 2026, while Alphabet is seen breaking even.
The shift matters because Big Tech used to be built on fast revenue at low cost. Now they are loading up spending with the hope that AI pays off later.
“If we continue down the track of lever up our company to build out for the hopes that we can monetize this, multiples are going to contract. If things don’t come together for you, this whole pivot would have been a drastic mistake,” O’Rourke said.
Valuations are high but still far from the dot-com extremes. The Nasdaq 100 trades at 26 times projected profits, far below the 80-plus levels seen during the bubble.
Tony DeSpirito of BlackRock said these are not dot-com multiples, though there are pockets of speculation. Palantir trades at more than 180 times estimated profit, Snowflake near 140, while Nvidia, Alphabet, and Microsoft are below 30.
Investors are stuck between fear and opportunity. Risks are visible, money is still flowing, and nothing is priced for panic. “This kind of group thinking is going to crack. It probably won’t crash like it did in 2000. But we’ll see a rotation,” Bhasin said.
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