US Stocks Today | Big tech faces valuation reset as AI spending scrutiny rises

The world’s largest technology companies have seen notable declines in market capitalisation in 2026, reflecting a shift in investor sentiment after years of strong gains driven by artificial intelligence optimism. According to Reuters, markets are increasingly questioning whether heavy AI spending will generate returns strong enough to justify elevated valuations.

Shares of Microsoft have fallen about 17% this year amid concerns over risks to its AI growth outlook and rising competition from Alphabet and other AI players, erasing a significant portion of its market value, according to Reuters data.

Amazon has also declined sharply as expectations of a surge in capital expenditure, particularly for cloud and AI infrastructure, weighed on investor sentiment. Reuters reported that investors are increasingly focused on the near-term payoff from these investments.


Meanwhile, Nvidia, Apple and Alphabet have also seen declines in valuation, highlighting a broader reassessment of growth expectations tied to the AI boom.

In contrast, TSMC, Samsung Electronics and Walmart have added market value over the same period, supported by stronger earnings visibility and resilient demand.

Strategists say the broader outlook remains constructive but caution that expectations are high.

Future Outlook

Looking ahead, the trajectory of mega-cap technology stocks will depend on whether companies can demonstrate tangible returns from AI investments through revenue growth and margin expansion. Markets are likely to remain sensitive to earnings surprises, with volatility possible if expectations are not met.

Commenting on what's in store for US tech stocks ahead in 2026, Mayank Sharma, Director & Head – Asset Allocation and Products, Client Associates, said, “While debate on the US Technology sector being too expensive and the AI bubble continues, we believe the AI theme may persist as long as it is justified by continued strong earnings delivery. Any downward surprises to high expectations may lead to bouts of volatility,”

Further, Akash Hariani, Joint Managing Director, Motilal Oswal Private Wealth, said, "AI remains a key theme for 2026, though caution is advised. AI spending as a share of U.S. GDP is rising rapidly, with some estimates suggesting it contributed 35% of GDP growth in Q2 2025, and has the potential to exceed 50%. Massive capital investment in AI data centres, advanced semiconductors and cloud infrastructure has supported both economic activity and equity returns. Key risks include weaker-than-expected growth, a more hawkish Federal Reserve, and the eventual returns on invested capital in AI-related capex."

At the same time, the evolving market environment suggests a greater focus on balancing growth with earnings visibility, as investors recalibrate portfolios in response to changing macro and valuation dynamics.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)