Investors Abandon AI Stocks Amid Growing Spending Concerns

Shares of technology and artificial intelligence (AI) companies, once highly sought after, are now being abandoned by investors. Following a major sell-off in chip and technology stocks last week, investors are demanding that giant corporations prove their massive spending on AI can generate profits. Concerns are mounting over a potential bubble, with the technology sector becoming the worst-performing group in the S&P 500 last week. The Philadelphia Semiconductor Index plummeted 10% in a week, marking its steepest decline since April 2025. SpaceX also faced pressure, with its shares falling 15% last week, bringing the total decline below its initial public offering price and wiping out approximately US$1 trillion in market value from its peak. Jake Seltz, portfolio manager at Allspring Global Investments, noted that investors are becoming uncomfortable with the amount of money being spent and fear a bubble. He stated that there needs to be a re-acceleration in revenue. The upcoming financial reports from major tech companies, including Alphabet, Tesla, Microsoft, Meta Platforms, Apple, and Amazon, are highly anticipated as they collectively represent a significant portion of the S&P 500’s market capitalisation. Particular focus is on Alphabet, whose shares fell 6.5% in two sessions amid reports of delays in its Gemini 3.5 Pro AI model, despite its stock still being up 11% for the year.