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META shares were down by over one per cent. This came after a planned $600 billion artificial intelligence spending splurge by big tech firms in 2026 is adding to investor unease as they assess the implications for profitability as well as a potential existential threat to software firms. Shares of Amazon, which had announced a $200 billion capital expenditure outlay, slid 7 per cent on Friday while Alphabet lost 3 per cent after the company said on Wednesday that capital spending could double this year.
"The market's viewpoint is that the AI build-out trade, and the way they've pulled forward all these earnings for many, many years, we think that's just got too pricey," said Andrew Wells, chief investment officer at SanJac Alpha in Houston. "It's not that the trade is over, but it got too pricey in pulling forward all these potential future revenues and not really pricing in the risk into all that. So it's a de-risking trade."
Meanwhile, the equities of data analytics firms continued to come under selling pressure on concerns that they face an existential threat from powerful new AI models.
Canada-based Thomson Reuters , which suffered a record one-day plunge earlier this week, was down 0.7%. London-listed RELX's shares lost 4.6% and notched a 17% tumble in their worst week since 2020.
The S&P 500 software and services index has fallen almost 8% this week and has seen around $1 trillion in market value evaporate since January 28.
"Headlines that would have pushed shares to fresh highs during the peak of AI optimism are now being interpreted far more cautiously by investors," said Carlota Estragues Lopez, equity strategist at St. James's Place in London.
"It's not just return-on-investment that worries investors, but also the risk of narrow market leadership that struggles to broaden beyond a handful of mega-cap names."
"The market's viewpoint is that the AI build-out trade, and the way they've pulled forward all these earnings for many, many years, we think that's just got too pricey," said Andrew Wells, chief investment officer at SanJac Alpha in Houston. "It's not that the trade is over, but it got too pricey in pulling forward all these potential future revenues and not really pricing in the risk into all that. So it's a de-risking trade."
Meanwhile, the equities of data analytics firms continued to come under selling pressure on concerns that they face an existential threat from powerful new AI models.
Canada-based Thomson Reuters , which suffered a record one-day plunge earlier this week, was down 0.7%. London-listed RELX's shares lost 4.6% and notched a 17% tumble in their worst week since 2020.
The S&P 500 software and services index has fallen almost 8% this week and has seen around $1 trillion in market value evaporate since January 28.
"Headlines that would have pushed shares to fresh highs during the peak of AI optimism are now being interpreted far more cautiously by investors," said Carlota Estragues Lopez, equity strategist at St. James's Place in London.
"It's not just return-on-investment that worries investors, but also the risk of narrow market leadership that struggles to broaden beyond a handful of mega-cap names."
