For the first time in two decades, institutional investors are flashing red warning signs about corporate overinvestment, with artificial intelligence spending at the center of their concerns. Bank of America's latest Global Fund Manager Survey has captured something unprecedented - a collective worry that the AI spending spree has gone too far, marking a historic shift in investor sentiment that could reshape how companies approach their AI strategies.
The warning bells are getting louder on Wall Street, and this time they're ringing for artificial intelligence. Bank of America's latest Global Fund Manager Survey has delivered a stark message that's sending ripples through the tech industry - for the first time in 20 years, institutional investors believe companies are overinvesting, with AI spending squarely in their crosshairs.
The timing couldn't be more significant. While tech giants like Microsoft, Google, and Amazon continue pouring billions into AI infrastructure and chip purchases, the smart money is starting to pump the brakes. Fund managers, who collectively control trillions in assets, are essentially telling the hyperscalers to slow their roll.
This isn't just another market survey - it's a historical marker. The last time institutional investors expressed this level of concern about corporate overinvestment was in the early 2000s, right around the dot-com bubble burst. The parallel isn't lost on anyone who lived through that era, when excessive spending on unproven technologies led to spectacular corporate failures and market corrections.
The survey results come at a particularly awkward moment for Big Tech. Just weeks ago, companies were reporting massive AI-related capital expenditures in their quarterly earnings, with Microsoft alone spending over $20 billion on AI infrastructure in the last quarter. Google's parent Alphabet similarly ramped up its AI investments, while Amazon continues expanding its AWS AI services despite mounting costs.
But fund managers aren't buying the endless growth story anymore. According to the Bank of America survey, these institutional investors - who've historically been patient with tech spending cycles - are now questioning whether the massive AI investments will generate proportional returns. It's a sentiment shift that could have profound implications for how tech companies fund their AI ambitions going forward.
The 'hyperscaler' reference in fund manager feedback is particularly telling. These are the companies - , , , and - that have been spending at unprecedented levels to build out AI capabilities. Their combined AI-related spending is expected to exceed $200 billion this year, a figure that's apparently making institutional investors nervous.
