Wall Street is worried that technology companies once known for their strong balance sheets are overspending on AI and may not see enough return on their investments – with consequences for the capital markets.
At a recent gathering of investors, economists and other financial professionals in Maine, the biggest question was whether massive AI spending will bring a sufficient ROI, The Wall Street Journal reported.
“I can’t answer the question, and Wall Street can’t answer the question,” longtime technology investor Barry Norton told attendees at the invitation-only Camp Kotok. “I don’t know that yet. I worry about that.”
The concern has intensified as Big Tech’s AI buildout pushed at least one company into negative free cash flow and sent several to debt markets to finance data centers, chips and other infrastructure. Investors remain heavily invested in AI stocks, but anxiety about the economics of the spending boom is mounting,
U.S. companies have issued roughly $220 billion in AI-related debt so far in 2026, compared with just $12.5 billion last year, according to Reuters.
Last week, Alphabet issued its first bond offering in Australia at $3.9 billion, Bloomberg News reported. In the second quarter, the parent of Google reported negative free cash flow for the first time as a public company as its AI infrastructure spending surged.
Meta has faced similar pressure. Its free cash flow plunged 91% in the second quarter to $784 million as spending on chips, servers, energy and data centers increased. Meta doesn’t own a cloud computing business that could sell excess compute capacity, but is looking to sell it to outside customers, Reuters said.
Meanwhile, Nvidia has entered an unusual financing arrangement worth as much as $500 billion with Wall Street firms including Apollo, BlackRock, Blackstone, Brookfield, Goldman Sachs and KKR, according to the Journal. The firms would lend money to AI companies and cloud providers that could use Nvidia chips they own or lease as collateral. The arrangement gives Nvidia clients access to cheaper financing, and sustain demand for its chips.
Overseas, SoftBank plans to issue a record $6.3 billion in yen-denominated retail bonds to fund AI investments and retire older bonds, according to the Journal. Chinese e-commerce giant Alibaba just issued $10.2 billion in new stock to pay for its AI investments, including those in infrastructure, CNBC reported. Days before, Alibaba reported a 75% drop in profits for the June quarter as AI spending took its toll. Capex rose 75%.
Even as investors are questioning whether the scale of AI spending can be justified, that uncertainty has not stopped investors from participating in the AI boom.
“There’s a party going on,” Peter Boockvar, chief investment officer at OnePoint BFG Wealth Partners, told the Journal at Camp Kotok. “People don’t want to leave early.”