When it comes to AI-related capital expenditures, investors are doing what they always do: asking what's in it for them. They were tolerant, even eager participants in some cases for the first quarter of 2026, but as the amounts projected to be spent continued to grow exponentially, while the 'path to profitability remained, to be polite, indeterminate, their patience has begun to wear thin.
The result has negatively impacted AI-related stocks versus those with more tangible near-term value payoff prospects like semiconductors. The lesson is not that AI is dead - far from it - but that investors are becoming more discerning - and demanding - about expected returns. They want tech executives to show that they are getting that message. JL
Cris Tolomia reports in Quartz:
This is shaping up to be Microsoft's worst start to a year since 2000, as investors grow increasingly impatient with the costs of its AI buildout costs that have not yet translated into visible growth. Shares had shed more than 24% of their value so far in 2026. Measured against its S&P 500 peers on a month-to-date basis, only 18 companies have performed worse, with Microsoft down 21.6% in June - a decline potentially the steepest June drop in the stock's history. The culprit is capital expenditures. Last quarter saw them climb 63% from the prior year, a direct cost to free cash flow, which contracted by 10%. With outlays for 2026 estimated at $190 billion, the pool of capital available for shareholder returns shrinks accordingly. Microsoft is not alone. Capital appears to be shifting toward segments of the AI trade with more tangible near-term returns - semiconductor and memory companies chief among them