Shares of Microsoft have fallen nearly 17% this year, according to Reuters data, on threats to its AI growth outlook and growing competition from Alphabet and other AI players, eroding a significant chunk of its market value.
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On 14 February 2026, 02:30 AM IST
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Amazon also fell sharply as expectations of increased capital spending, particularly for cloud and AI infrastructure, weighed on investor sentiment. Investors are increasingly focusing on near-term returns from these investments, Reuters reported.
Meanwhile, Nvidia, Apple and Alphabet also saw valuation declines, highlighting a broader reassessment of growth expectations tied to the AI boom.
In contrast, TSMC, Samsung Electronics and Walmart have added market value over the same period, supported by strong earnings visibility and resilient demand.
Strategists say the broader outlook remains constructive but caution that expectations are high.
Future Outlook
Looking ahead, the trajectory of mega-cap technology stocks will depend on whether companies can demonstrate tangible returns from AI investments through revenue growth and margin expansion. Markets are likely to remain sensitive to earnings surprises, with volatility possible if expectations are not met.
Commenting on what’s in store for US tech stocks ahead in 2026, Mayank Sharma, Director and Head – Asset Allocation & Products, Client Associates, said, “While the US technology sector is very expensive and the AI bubble is ongoing, we believe the AI theme can continue as long as it is expected to lead to higher earnings. In the face of volatility,”
Further, Akash Hariani, Joint Managing Director, Motilal Oswal Private Wealth, said, “AI is a key theme for 2026, though caution is advised. AI spending as a share of US GDP is growing rapidly, with some estimates suggesting it contributed 35% of GDP growth in Q2 and capital is likely to account for 2025% to 2025. In AI data centers, advanced semiconductors and Cloud infrastructure has supported both economic activity and equity returns with key risks including weaker-than-expected growth, a more hawkish Federal Reserve and eventual returns on capital invested in AI-related capex.”
At the same time, the evolving market environment suggests greater focus on balancing growth with earnings visibility, as investors recalibrate portfolios in response to changes in macro and valuation dynamics.
(disclaimer: Recommendations, suggestions, opinions and views given by experts are their own. (These do not represent the views of The Economic Times)
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