Are AI spending expectations simply too high?

Investing.com -- Wolfe Research warned in a note Tuesday that investors may be assuming an unsustainably aggressive pace of artificial intelligence investment, even as market volatility remains elevated.

The firm told clients that recent trading illustrated how “AI disruption risk has pushed investors to ‘sell first, ask questions later’, giving the most benign headlines the ability to send industries down 5%+.”

Analyst Chris Senyek noted the S&P 500, Nasdaq 100 and Russell 2000 fell between 1% and 1.6% in Monday’s session.

According to Senyek, the central issue for 2026 is whether hyperscalers can maintain the spending momentum that exceeded forecasts last year.

He wrote that “over the course of 2025, hyperscalers capital expenditures surprised to the upside versus consensus estimates,” but added that “the key question this year is whether they will continue this furious rate of spending.”

Wolfe Research highlighted growing constraints that could begin to interfere with large-scale AI infrastructure buildouts by the second half of this year.

The analyst flagged risks from “power generation, material costs, or regulatory hurdles,” arguing these bottlenecks could start to weigh on project timelines.

A shift in spending behaviour would have significant market implications.

Wolfe Research believes “a delay or cut to capital spending would be a very positive catalyst for areas of the market that have been most impacted by AI,” while potentially triggering “a large drawdown for the most crowded stocks levered to AI spending (e.g., semis, industrials).”

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