Remember when everyone said “this time is different”? Yeah, JPMorgan just threw cold water on that idea.
Here’s the plot twist nobody saw coming: while chip and memory stocks are absolutely crushing it—the Philadelphia Semiconductor Index is up 87% this year—the companies actually *spending* the money on AI are getting absolutely wrecked. Meta and Microsoft, two of the biggest AI capex spenders, are down 5% and 18% year-to-date respectively. Microsoft just had its worst month since 2000. Ouch.
JPMorgan’s Jason Hunter noticed something spooky: this exact dynamic happened in 1999, right before the dot-com bubble exploded. Back then, companies *making* the equipment for the internet boom saw parabolic rises while the companies *investing heavily* in the space tanked. Sound familiar?
The Magnificent Seven—those mega-cap tech stocks that rode the AI hype train all through 2025—are down 7% from their peak. Meanwhile, the Roundhill Memory ETF is up 141% since April. It’s like watching a seesaw where one side keeps going up while the other crashes through the floor.
The real kicker? Meta, Microsoft, Amazon, and Alphabet are on track to spend $725 billion on AI capex this year alone. Goldman Sachs projects that by the end of the decade, these four companies’ AI spending could exceed Japan’s entire GDP. That’s not an investment strategy—that’s a fever dream.
Hunter’s warning is basically: “We’re watching to see if these hyperscaler stocks find their footing this summer. If they don’t, we could be looking at a serious sentiment-driven selloff come fall.” Translation: the market might be pricing in a reality where all this AI spending doesn’t actually, you know, make money.
The uncomfortable truth? Nobody really knows if AI will deliver returns that justify this spending spree. And when the market realizes that, things could get messy fast.
