Trescothick’s Take: The Market Isn’t Punishing AI Spending. It’s Rewarding Proof.

(This is a follow-on to an article published on the 23rd of July 2026)

As I discussed in a previous article, for the best part of two years, corporate America has been engaged in an AI spending contest that would make even the most enthusiastic teenager with their first credit card blush.

Build another data centre? Splendid.

Order another few hundred thousand GPUs? Excellent.

Spend another $30 billion? Investors would probably applaud before asking where to sign.

Back then, the market had one simple question:

“Are you investing enough in AI?”

Today, the question has changed.

“Can you prove it’s worth it?”

It’s a subtle shift, but one that could define the next chapter of this bull market.

Recent earnings have made one thing abundantly clear. Wall Street isn’t turning its back on artificial intelligence. Far from it. What it is doing is separating the companies already showing tangible returns from those still asking shareholders to take the whole thing on faith.

That distinction matters.

Take Microsoft. Investors remain remarkably comfortable with the company’s vast AI expenditure because there is growing evidence that those investments are feeding directly into Azure growth, enterprise software demand and cloud revenues. The spending is visible, but so are the rewards.

Meta tells a similar story. Mark Zuckerberg’s AI gamble increasingly looks less like a moonshot and more like a business strategy. Improved advertising efficiency, stronger user engagement and rising revenues have given investors confidence that the billions being spent today may ultimately generate billions more tomorrow.

Investors may not know exactly where the road ends, but they can at least see it.

Then there are the companies still asking shareholders for a little more patience.

Alphabet recently discovered that announcing another wave of AI spending no longer guarantees applause. Investors weren’t questioning the importance of artificial intelligence. They were asking a much simpler question: when do the profits arrive?

Now SpaceX has found itself facing a remarkably similar challenge.

Its latest earnings were impressive by almost any conventional measure. Revenue growth remained strong, long-term opportunities remain enormous, and the business continues to execute well. Yet investors quickly focused on the scale of AI investment and the length of time it may take before shareholders see meaningful financial returns.

That reaction tells us something important.

The market isn’t saying these investments are wrong.

It’s saying the burden of proof has changed.

For years, simply announcing another multi-billion-dollar AI investment was enough to send a share price higher. Today, management teams may find investors instinctively reaching for the calculator rather than the confetti.

For a while, management teams could have announced plans to build an AI-powered kettle and the market would probably have added 5% to the share price.
Those days, I suspect, are behind us.

There is a tendency in markets to swing from one extreme to another. First, investors dismissed AI as another technology fad. Then they embraced it with such enthusiasm that profitability occasionally appeared to become an optional extra.

The truth, as it so often does, lies somewhere in between.

Artificial intelligence will almost certainly reshape industries, transform productivity and create extraordinary winners over the coming decade. But even revolutions eventually have to produce a return on investment.

Cash flow still matters.

Returns on capital still matter.

Shareholders still expect management teams to create value rather than simply consume it.

Markets have an amusing habit of changing the exam halfway through the course.

Yesterday, companies were rewarded simply for entering the AI race.

Today, they’re expected to explain how they intend to win it.

That isn’t scepticism.

It’s capitalism.

The companies that genuinely change the world won’t fear those questions. In fact, they’ll welcome them. Because the businesses generating real returns will eventually separate themselves from those relying on little more than hope and a very ambitious PowerPoint presentation.

James’s closing thought

Markets haven’t fallen out of love with artificial intelligence. They’ve simply ended the honeymoon.

The flowers have wilted; the champagne has run dry and investors have started asking awkward questions about the household budget.

That’s no bad thing.

For the last two years, Wall Street rewarded companies for telling the best AI story.

The next two years will belong to those that can prove it.

And in markets, proof tends to be considerably more valuable than promises.

Anyway, till next time, all of you trade safe!

By James Trescothick
Head of Market Research and Market Analysis

Risk Disclaimer: This information is for educational purposes only and does not constitute investment advice. Financial markets involve risks, and past performance is not indicative of future results. Always conduct your own research and seek professional advice before making investment decisions.