Bespoke Investment Group published a chart showing “a new ‘AI Doom’ basket that includes 55 large-cap stocks that have recently been punished by AI headlines. This basket is now trading down to levels last seen in April at the ‘tariff tantrum’ lows for the S&P 500” last year, the group said.
“If you see a strong man suddenly break down in tears in a restaurant because there’s no chilli sauce on the table, you immediately understand that he must have been holding back those tears for a long time.”
More seriously, Goldman Sachs noted that capital expenditures (capex) by the AI hyperscalers is now estimated to be $667 billion in 2026, up 62% from the year before. That crosses a threshold established by the dot-com bubble of the late 1990s.
“Hyperscaler capex is now on pace to exceed 90% of cash flows this year, above the share during the Dot Com Boom,” Ryan Hammond and his colleagues told clients.
“A deceleration in the quarterly growth rate is likely in late 2026. The revenue growth and valuations of some AI infrastructure stocks appear vulnerable to a slowdown in capex growth. Even where rallies have been driven entirely due to earnings, the recent dislocation between [Nvidia] price and earnings shows the challenges of delivering persistently strong returns amid fears of ‘over-earning.’”
Here’s a snapshot of the markets this morning prior to the opening bell in New York:
