AI Valuation Reckoning Hits Big Tech as Investors Demand Profits Over Promises

Some of the world’s most valuable technology companies have suffered steep market value losses this year, marking a sharp reversal after years of outsized gains driven by enthusiasm around artificial intelligence. Investors are increasingly questioning whether massive AI-related spending will deliver returns strong enough to justify previously stretched valuations.

Microsoft has been among the hardest hit, with its shares down about 17% year-to-date. Concerns over intensifying competition in AI—from Google’s latest Gemini model to Anthropic’s Claude Cowork agent—have weighed on sentiment, erasing roughly $613 billion in market capitalization and pulling Microsoft’s valuation down to about $2.98 trillion.

Amazon has also come under pressure, shedding nearly 14% so far this year and wiping out around $343 billion in market value, leaving the company valued at approximately $2.13 trillion. The selloff accelerated after the company signaled earlier this month that capital expenditures are set to surge by more than 50% this year, reinforcing fears over rising costs and uncertain payoffs from AI investments.

Other mega-cap tech names have not been spared. Since the start of 2026, Nvidia, Apple and Alphabet have seen their market values decline by about $89.7 billion, $256.4 billion and $88.0 billion, respectively. Despite the losses, all three remain among the most valuable companies globally, with market capitalizations of roughly $4.44 trillion for Nvidia, $3.76 trillion for Apple and $3.7 trillion for Alphabet.

The pullback reflects a broader shift in market psychology. After years of rewarding long-term AI narratives and growth-at-any-cost strategies, investors are now prioritizing near-term earnings visibility, cost discipline and clearer paths to monetization.

In contrast, companies seen as offering more tangible earnings momentum or strategic positioning have attracted fresh inflows. Taiwan Semiconductor Manufacturing Company, Samsung Electronics and Walmart have added a combined hundreds of billions of dollars in market value this year. TSMC has gained about $293.9 billion, Samsung roughly $272.9 billion and Walmart around $179.2 billion, lifting their valuations to approximately $1.58 trillion, $817 billion and $1.07 trillion, respectively.

The divergence highlights a market increasingly selective in how it prices growth, signaling that even AI leaders are no longer immune to scrutiny over spending, competition and profitability.