Investment Sentiment Shifts Amid Concerns Over AI Spending
The latest Global Fund Manager Survey from Bank of America indicates a notable shift in investor sentiment regarding capital expenditures (capex) in AI, with many fund managers now believing that companies are “overinvesting.” According to JPMorgan analyst Michael Cembalest, approximately 90% of capex growth since November 2022 has been linked to AI-related stocks. This change in perspective could be contributing to the recent declines in stocks from major tech companies like Meta Platforms, Alphabet, Amazon, and Microsoft, which have all underperformed against the S&P 500 year to date.
Historically, fund managers favored increased capex spending; however, the last three months have seen a reversal of this trend. Investors are expressing skepticism about the profitability of continued heavy investments in AI, raising concerns that recent spending may not yield the expected returns.
