S&P 500 falls 0.4% amid questions over returns on AI investments
Key Facts
The S&P 500 fell 0.4% in Friday’s session on Nov. 13, but ended the Nov. 9–13 week up 2.5%, according to the Associated Press. The mixed performance came as investors focused on whether AI profits could justify costly investments and elevated market valuations. The agency said weakness in AI-linked technology stocks weighed on the market even as more than 60% of the index’s stocks rose during the session. The Dow Jones Industrial Average gained 0.1%, while the Nasdaq Composite fell 0.9%. Even so, the Nasdaq posted its first weekly gain after five weeks without one, the agency said.
The divergence within the technology sector extended to chipmakers’ shares: Nvidia fell 2% in the Nov. 13 session, Broadcom declined 4.8%, and Advanced Micro Devices lost 8.8%, according to the Associated Press. The agency noted that Nvidia was again among the stocks weighing most heavily on the index. During the Nov. 9–13 week, the company’s market value fell by about $600 billion, amid the fallout from its chief executive’s resignation. Broader concerns centered on whether AI-generated profits would match the cost of major investments and the rise in stock valuations. That puts infrastructure spending at the heart of investors’ debate over the expected returns from the sector’s expansion.
These concerns come as BofA Global Research expects the largest cloud computing companies to spend about $795 billion on capital expenditures in 2026 and nearly $1.08 trillion in 2027, according to a Reuters report carried by Investing.com. The group includes Microsoft, Alphabet, Amazon, Meta Platforms and Oracle, the report said. On actual spending, IDC said global spending on AI infrastructure reached $121.4 billion in the second quarter of 2026, up 53% year over year. The company raised its forecast for annual spending in 2026 to $521 billion. These estimates show the scale of funding tied to infrastructure expansion, while the ability of that spending to support profits remains central to the investor concerns reported by the Associated Press.
Views of the spending’s impact vary by time horizon: Wells Fargo said AI-related capital expenditure added about eight percentage points to S&P 500 companies’ earnings growth in the year before its report. The institution expected that support to continue in 2027 before largely fading in 2028 as spending growth slows and depreciation costs rise, according to Reuters via Investing.com. On the supply side, Jon Gray, Blackstone’s president, said demand for computing capacity exceeds supply and that data centers require large amounts of power. David Solomon, Goldman Sachs’ chief executive, warned that the sector’s growth could be accompanied by disruption and volatility. These remarks put the expansion of data centers and their power needs in the context of the debate over companies that depend on continued infrastructure construction.
A divergence among AI-linked companies had already emerged in the Nov. 4 session: Microsoft shares rose 6.7% and Amazon shares gained 6.1%, while data center operators Hut 8 fell 23%, IREN declined 11% and Core Scientific lost 10%, according to Reuters via MarketScreener. The Reuters report linked this to expectations that a slowdown in infrastructure expansion would ease cash needs for technology companies while putting pressure on operators and suppliers whose growth depends on the pace of construction. In a report dated Sept. 15, Reuters quoted an investor as saying the problem would become tangible if purchase orders began to be canceled or data center construction deals were canceled. BofA Global Research forecast capital spending of about $795 billion in 2026 and nearly $1.08 trillion in 2027 by major cloud computing companies, according to the same report. Wells Fargo said the earnings support from spending was expected to continue in 2027 before largely receding in 2028 as spending growth slows and depreciation rises.