Technology companies are spending big to incorporate artificial intelligence into their businesses and to build huge data centers. Investors who had jumped on the bandwagon appear to be having second thoughts.

Proponents of artificial intelligence see it as the next great revolution for the global economy. The revolution won’t come cheap. Just four companies — Alphabet, Amazon, Meta Platforms and Microsoft — plan to spend up to $720 billion this year, primarily on AI data centers.

This week, investors are looking at the huge sums being spent and questioning whether AI can produce the profits and productivity necessary to make all the investment worth it. Critics have been talking about the possibility of a bubble in AI investment. On Monday, Amazon and Alphabet fell about 5%.

On Tuesday, several companies that make the chips needed for the data center buildup — Nvidia, Micron Technology, Broadcom and Lam Research — led the market lower.

At first, Microsoft, Alphabet and other so-called hyperscalers turned to cash on hand to fund the AI expansion. But they’re increasingly relying on the markets to raise cash.

AI buildout needs cash

Alphabet, the parent company of Google, said earlier this month that it’s raising $80 billion in cash to help pay for its investments by selling shares of its stock. Overall, Alphabet is planning to spend as much as $190 billion this year — more than all the stock of The Walt Disney Co. is worth, and Alphabet is forecasting its spending on investments next year will “significantly increase.”

In March, Amazon sold $54 billion of bonds in the U.S. and Europe as it plans to spend around $200 billion this year on AI investments.

Elon Musk’s rocket maker SpaceX was on a three-day skid heading into Tuesday. It regained some lost ground, but ended trading slightly below the closing price on its first day of trading on June 12. Musk acknowledges that SpaceX will have to spend heavily to fulfill its plans of sending AI data centers into space, and the company has announced that part of an upcoming bond offering will fund its AI buildout.

High-priced chip companies

Chip companies have benefitted as the demand for memory chips and processing power for AI data centers and other projects has led to a supply shortage and a surge in prices. Investors have bid up the share prices of these companies now in anticipation of big profits down the road. By one measure, which compares a company’s stock price to its earnings per share, these companies might look expensive.

Marvell Technologies lost money for five straight years before turning a profit of $2.7 billion in the fiscal year ended in January, thanks to gains in its data center business. The stock has more than tripled so far this year and its price-to-earnings ratio has gone from about 30 at the start of 2026 to near 100.

Some data storage companies have seen even more eye-popping gains. Sandisk shares have soared more than 700% year to date and its P/E ratio stands at 68. Whether Sandisk shares are overvalued will depend on whether it meets Wall Street’s lofty expectations for the next 12 months -- earnings per share of $188.05 per share compared with $29.16 per share for the 12 months ended March 31. When the current stock price is compared to the forecast, the price-to-earnings ratio falls to around 11.

The current price-to-earnings ratio for the S&P 500 is around 25.

On Tuesday, investors unloaded at least some of their holdings in these stocks. Sandisk sank 13.6%, while Marvell lost 9.4%.

The sell-off also took a bite out of exchange-traded funds, or ETFs, that invest heavily in tech stocks. The Invesco QQQ Trust Series ETF was down 3.3%, while iShares Semiconductor ETF slumped 7.9%.

Pocketing some gains

While some investors may have doubts that companies going full throttle on AI infrastructure spending will ultimately be able to generate profits to justify their investment, it’s likely some of the selling this week may be investors pausing to pocket some of their gains after the stock market’s recent string of all-time highs.

“With no clear catalyst driving the move lower, we believe today’s pullback likely reflects profit-taking following a strong rally from the March lows,” said Brock Weimer, an investments strategy analyst at Edward Jones.

Big Tech gains have powered major stock indexes on record-setting runs this year. Within the S&P 500, the tech sector alone is up nearly 27% just over the last three months and roughly 17% for the year. In Asia, South Korea’s Kospi has nearly doubled so far in 2026.

Heavy selling on Tuesday triggered a halt in trading in the Kospi, which set the stage for the wave of tech stock selling when trading opened in U.S. markets, Wedbush analyst Dan Ives wrote in a research note Tuesday.

Overall AI enterprise demand in Asia is “showing no cracks in the armor, which continue to make us very bullish on owning the tech AI winners over the coming year,” he added.

Still, tech companies’ race to invest in the expansion of AI infrastructure could ultimately be sowing the seeds of future oversupply, according to Philip Straehl, chief investment officer at Morningstar Wealth.

“Periods of elevated capital investment have historically not translated into strong outcomes for investors, leaving us cautious on the outlook,” Straehl wrote in a report last week.

He expects that the rapid expansion of AI computing power will weigh on pricing, hurting companies’ returns and eventually result in a pullback in investing. Semiconductor companies are “particularly exposed to this dynamic,” Straehl wrote.