AI giants' funding ambitions test Wall Street's appetite for risk

The biggest companies in the AI industry are facing a tough test on Wall Street. Investors are worried about who will pay for the huge spending on artificial intelligence, which has helped drive much of this year's stock market gains.

The biggest AI companies are facing a tough test on Wall Street. Investors are worried about who will pay for the huge spending on artificial intelligence, which has helped drive much of this year's stock market gains.

Anthropic filed paperwork for its initial public offering on Monday. This moves the company closer to selling shares to the public, in a deal reportedly worth $100 billion that could happen as early as next month.

Meta also announced a plan this week that could raise as much as $97.5 billion by selling shares over the coming months.

Investors will also look for signs of fundraising plans when Microsoft and Alphabet report their earnings later on Wednesday.

By moving ahead with these huge plans to raise money, the biggest AI companies are betting that investors will be more afraid of missing out on future profits than of paying too much for them.

According to an analysis by Carson Group, AI stocks accounted for nearly 75% of the S&P 500 index's gains in the first half of 2026.

"The growth of the AI ecosystem over the last several years is quite astounding," said Ehren Stanhope, chief investment strategist at Franklin Templeton's Canvas. "The idea that such large firms can grow their earnings by more than 100% a year for several years seems to go against the basic rules of economics."

But Wall Street's response in recent weeks suggests that big ambitions alone are no longer enough to convince investors to put in their money.

Meta's shares have fallen more than 11% since the company announced plans last week to create a new class of stock to support share sales. The company also reported that its cash spending was higher than its cash coming in for the first quarter in more than a decade.

Anthropic's rapidly growing revenue helped ease worries about AI growth, but its rising losses have raised new questions. The company's net loss grew to $80.7 billion in the first half of 2026, up from $13 billion a year earlier.

"Not even Anthropic will get a blank check," said Matt Kennedy, senior strategist at Renaissance Capital. He meant that investors will not give the company unlimited money without asking questions.

The need for more funding comes as circular financing deals are becoming more common. In these deals, money invested in AI companies can flow back to the same investors when the companies spend money on computing equipment, data centers and services.

Smaller firms feel the heat

Smaller companies with large debts face a tougher situation. CoreWeave's bond yields have risen sharply, raising questions about how much interest the company will have to pay when it borrows more money next time.

"The danger (for CoreWeave) is the next loan. And how soon CoreWeave needs it matters as much as the price," said Matthew Tuttle, founder and CEO of Tuttle Capital Management.

Last week, CoreWeave's shares fell to their lowest level since May 2025 as worries about its dependence on debt grew.

The stock has recovered about 10% so far this week. But, Tuttle added, "a company surviving and its old shareholders winning are two different outcomes." In other words, a company may stay in business without its existing shareholders making money.

SpaceX CEO Elon Musk recently said that companies known as neoclouds, which provide computing power for AI, could see major consolidation and business failures. He ruled out SpaceX buying a neocloud company, saying such a deal would be "pointless."

Still, according to data from J.P. Morgan, the money Amazon, Alphabet, Meta, Oracle and Microsoft are expected to spend on AI this year would likely equal their total spending since ChatGPT launched in November 2022.

"In effect, the Street appears to be underwriting the AI data center monetization case," wrote Dubravko Lakos-Bujas, the brokerage's head of global markets strategy. This means investors seem willing to bet that companies will eventually make enough money from AI data centers to justify the huge costs.