Is this the beginning of the end of the AI stock market boom?
Investors are questioning whether the estimated $US1tn AI investment this year rests on solid ground. The Nasdaq 100 slipped 5.5% last week, reviving fears of an AI bust, while the failed ASX listing of Australian datacentre firm Firmus – once pitched as a multi‑billion dollar IPO that could outvalue Telstra – has been cited as a warning sign.
Key points
- Nasdaq 100 dropped 5.5% last week, reigniting AI‑boom concerns.
- Amazon, Microsoft, Google and Apple spent $US425bn on AI capex in 2025, aiming for $US800bn this year and over $US1.1tn next.
- The “magnificent seven” now account for 35% of the S&P 500, up from 12% a decade ago.
Gerard Minack of Minack Advisors said investors are over‑estimating AI returns and he is “becoming more confident that returns on AI investment will disappoint”, though he stopped short of calling a market top. JP Morgan strategist Raisah Rasid described the recent sell‑off as a “valuation reset” rather than a loss of faith in AI, noting that the “magnificent seven” now own 35% of the S&P 500, up from 12% a decade ago, and that their total market cap has risen more than 50% in two years.
Companies such as Amazon, Microsoft, Google and Apple spent $US425bn on AI‑related capex in 2025 and are on track for $US800bn this year and over $US1.1tn next. Corporate bonds from these firms now make up nearly 10% of global investment‑grade credit, up from 0.5% at the end of 2024, according to the International Monetary Fund. The IMF also listed a bursting AI bubble as a top global‑economy risk.
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Is this the beginning of the end of the AI stock market boom?
The Guardian AI · 20 October 2026
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