Asger Risom
Conflicting fears over AI disruption and unsustainable spending have triggered widespread selloffs, erasing more than $1 trillion from major tech stocks and sparking volatility across multiple industries.
A wave of volatility is sweeping through global markets as investors wrestle with two conflicting fears about artificial intelligence.
The result is a selloff hitting both the companies building AI — and those seen as vulnerable to it.
Over the past two weeks, stocks tied to artificial intelligence have come under sustained pressure.
More than $1 trillion in market value has been erased from major technology firms pouring hundreds of billions of dollars into AI development, while companies across other sectors have also been dragged lower.
The turbulence reflects what Bloomberg describes as duelling anxieties: that AI could rapidly disrupt large swaths of the economy, and that the enormous spending required to build it may not generate returns anytime soon.
“There is a contradiction when it comes to what investors are worried about when it comes to AI,” Julia Wang, North Asia chief investment officer at Nomura International Wealth Management, told Bloomberg Television. “Those two things can’t be true at the same time.”
Spending under scrutiny
The shift marks a break from recent years, when optimism about AI-driven productivity helped propel markets higher. Meta rose nearly 450% from late 2022 to early 2026, while Alphabet gained more than 250% over the same period.
Now, investors are questioning whether the spending surge will pay off. Microsoft, Amazon, Meta and Alphabet are expected to spend more than $600 billion on capital expenditures in 2026 alone.
“That’s hoovering up free cash flows and loading the companies with depreciating assets,” Bloomberg reported, changing key financial dynamics that previously supported their valuations.
“This is a real no-win situation,” said Anthony Saglimbene, chief market strategist at Amerprise Advisor Services. “Now they want to know more immediately when the payback will come — and we don’t have a clear picture.”
Since late January earnings reports, Microsoft and Amazon shares have dropped more than 16%, while Meta and Alphabet have also retreated sharply. In total, roughly $1.5 trillion has been wiped from their combined market capitalisations.
Contagion spreads
At the same time, investors are punishing companies perceived to be at risk from AI disruption.
New tools from Anthropic aimed at lawyers and financial researchers triggered declines across related industries. Insurance brokers fell after another program tied to OpenAI. Even announcements from smaller startups have sparked sharp selloffs in sectors such as logistics and wealth management.
Some analysts argue the market reaction may be excessive.
“Just because the exuberance of the past few years has been taken down, people are now acting irrationally, thinking AI has become a headwind to the economy,” Bobby Ocampo, co-founder of Blueprint Equity, told Bloomberg.
However, UBS recently downgraded its view on technology stocks, warning that capital spending by hyperscalers could consume nearly all operating cash flow, compared with a 10-year average of 40%.
For now, the AI trade appears trapped in what some describe as a doom loop: fear that the technology will upend business models, combined with concern that its builders are overspending to achieve it.
Sources: Bloomberg; Nomura International Wealth Management; Amerprise Advisor Services; UBS; Blueprint Equity
