2026 was meant to be the year Wall Street’s trillion-dollar artificial intelligence (AI) bet started paying off. Instead, it’s turning into a test of nerves. In the first half of the year, many AI stocks hit record highs as US hyperscalers like Google's Alphabet, Meta and Microsoft recorded bumper earnings.
Two of the largest AI players — Anthropic and OpenAI — announced plans for public listings, following SpaceX's much-hyped IPO in June, which briefly made Elon Musk the world's first trillionaire. AI models, meanwhile, got noticeably better at difficult tasks in the race to beat human intelligence. To view this video please enable JavaScript, and consider upgrading to a web browser that supports HTML5 video The second half of 2026, however, has brought a lot more uncertainty.
While the stock of Nvidia, a chipmaker, pushed even higher last month, many hyperscalers and chip or memory firms have seen their stock prices gyrate wildly. Then last week, after the Democrats secured control of the United States Congress in the midterm elections, technology stocks sold off dramatically, with the Magnificent Seven — including Meta, Apple, Amazon and Tesla — losing more than $1 trillion in value in a single trading day. In a further twist, the AI sector took another hit this week as Nvidia shares plunged nearly 10% over two days.
The sell-off followed news that Nvidia's board — alongside the FBI — is investigating CEO Jensen Huang’s ties to a woman suspected by US intelligence of being a Chinese spy. On Thursday, Huang resigned from the chipmaker when a second alleged marital affair was revealed, sending Nvidia's shares lower still. Wall Street is growing increasingly cautious about the sheer size of the AI outlay, amid warnings that future earnings may not justify the huge spending.
Growing pressure on US lawmakers to curb the expansion of AI data centers has added to those doubts. In September, investment bank Goldman Sachs estimated that hyperscalers need around $300 billion in annual AI revenue to break even on their spending, leaving a gap of roughly $230 billion. "We're not in Kansas anymore," Dennis Dick, chief market strategist at the Canada-based Stock Trader Network, told DW, meaning that times have changed.
Now, he said, investors are telling companies: "show me the money." Other analysts think it's too soon to expect the AI bubble to burst, including Kit Rees, investment strategist at London-based wealth manager Quilter, who thinks last week's rout was a "healthy correction." "We’re still in the very early innings of the AI build-out," Rees told DW. "There’s still a lot of excitement around this technology and investors will want to have a slice of the pie." In addition to the roughly $800 billion invested in capital expenditures this year, AI hyperscalers plan to spend a further $1.2 trillion in 2027 and $1.4 trillion in 2028, according to Goldman Sachs estimates. While OpenAI has delayed its public listing until next year, Claude-maker Anthropic still plans its IPO later this month.
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