Tech Investors Reassess AI Stocks as Capex Concerns Mount, ING Reports

Investors are reevaluating their exposure to artificial intelligence stocks amid concerns that soaring infrastructure spending could weigh on near-term profitability and valuations. While the long-term outlook for AI adoption remains robust, the immense capital required is expected to impact earnings growth and shareholder returns, according to a recent report from ING.

The Cost of Intelligence

The core issue stems from the significant capital expenditure (capex) needed to build and maintain AI infrastructure. This spending is projected to increase depreciation costs, which directly reduces earnings per share (EPS). According to ING, this could also slow the pace of share buybacks, a key mechanism that has supported high equity valuations for major technology firms.

This uncertainty has contributed to significant volatility in the sector. In the first half of 2026, for example, Microsoft (MSFT) shares fell 20% and Oracle (ORCL) dropped 27%, while Alphabet (GOOGL) gained 14%, reflecting investor debate over the eventual return on these massive AI investments.

Spending Justified, But Risks Remain

For now, analysts view the current spending levels as economically sound, as demand for AI computing continues to outpace available capacity. Microsoft, for instance, is investing approximately $65 billion in cloud and AI infrastructure in fiscal 2025 while generating an annualized AI revenue of about $37 billion. Most large tech companies can finance these projects through their operating cash flow.

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However, the strategy carries risks that could affect shareholder value:

• Reduced Buybacks: Rising capex is expected to limit free cash flow, particularly at Microsoft, Alphabet, and Meta Platforms (META), potentially reducing their capacity for share repurchases.
• Valuation Pressure: A combination of slower buybacks and higher depreciation could make investors hesitant to pay premium earnings multiples if significant AI revenue takes longer than expected to materialize.

Company-Specific Headwinds

Certain companies face unique challenges. ING identifies Oracle as a higher-risk case, where its ambitious investment program could strain cash flow and increase its need for external funding.

Meanwhile, market leader Nvidia (NVDA) may face intensified competition over the long term. Key customers like Microsoft, Alphabet, and Amazon are actively developing their own proprietary AI chips to enhance infrastructure efficiency and reduce their reliance on third-party suppliers. The central question for investors is whether future revenue growth and profit margins will ultimately justify today's unprecedented level of investment.