Alibaba, Nvidia show market is instantly rewarding AI spending

The euphoria toward artificial intelligence is creating a strange kind of new math in the stock market: Plans for massive AI investments often lead to even larger increases in market value for the companies writing the checks.

Take Nvidia Corp., which last week said it will buy a $5 billion stake in rival Intel Corp. and on Monday announced plans to invest up to $100 billion in ChatGPT creator OpenAI. The chipmaker added more than $320 billion in market value in the three trading days when the plans were announced — triple the amount the company is expected to spend under both agreements.

Then on Wednesday, Alibaba Group Holding Ltd.’s US shares jumped as much as 10% after the company said it would spend even more on AI than a $50 billion target set earlier in the year. While the total amount of additional anticipated spending wasn’t even announced, the news swelled Alibaba’s market capitalization by more than $35 billion.

While massive corporate spending plans typically haven’t tended to be instantly rewarded in the stock market, these moves highlight that investors are still clamoring for all things AI and they are happy to keep piling into shares of companies spending big on data centers to position themselves as leaders in the space. The massive increases in market value come even as only a few companies have been able to show a material return on the investment in their financials.

“The market is convinced that leadership in AI is going to take a lot of investment,” said Tejas Dessai, director of thematic research at Global X Management Company LLC. “And the market is also convinced that there are profits that can be earned out of this opportunity as long as you have the scale and the infrastructure to really service all this demand.”

Other stocks that’ve seen a lift this year after pledging to spend more than $317 billion combined on AI include Meta Platforms Inc., Microsoft Corp, Alphabet Inc. and Amazon.com Inc., whose gains account for a major part of the S&P 500 Index’s rally in 2025. The amount of value added to the companies this year far outstrips how much the group intends to spend: The four together have seen their market capitalization boosted by about $1.8 trillion.

Oracle Corp. is another beneficiary of plans to boost spending on AI alongside high-profile partnerships with the likes of OpenAI, SoftBank Group Corp. and Meta Platforms as well as solid earnings outlooks that’ve charmed investors. The company is expected to spend $35 billion on capital expenditures in fiscal year 2026, and increase that amount to $65 billion by fiscal 2029. The stock has risen by more than 80% this year, adding nearly $390 billion to its market value.

The market enthusiasm toward data-center builds comes despite mounting concerns that recent deals, such as the one between Nvidia and OpenAI, potentially signal a bubble due to the circular nature of the agreements: Nvidia is essentially investing in its customers.

And with the biggest technology stocks making up a larger portion of the market than ever, the increased concentration risk could mean any downside pressure on them could spark a nasty move lower in benchmark indexes.

Read More: Big Tech’s Market Dominance Stirs Debate on Concentration Risks

“We are clearly in uncharted waters,” Louis Navellier, chief investment officer of Navellier & Associates, wrote in a Wednesday note to clients describing the concentration risk and the fact that the value of the US stock market is now more than double the size of the nation’s economy.

‘Bubble Environment’

The movement in Nvidia’s stock especially is “atypical market behavior that is representative of the bubble environment,” said Michael O’Rourke, chief market strategist at Jonestrading, adding that the company’s $4.3 trillion market capitalization means that even small moves in shares constitute billions of dollars in value gained or lost.

Still, bubble or not, many on Wall Street believe that the trend is likely to continue, at least in the near future. Investors have made it clear they have appetite for AI ambitions and the companies that are willing to spend big as an arms race of sorts emerges.

While technological infrastructure investment has drawn skepticism in the past due to unfavorable outcomes such as the bursting of the dot-com bubble, there’s more support today for innovations that have already proven to be transformational.

“The market has been super friendly to allow these companies to go on this investment spree, which again ties back to the story that the market really believes that AI presents a foundational opportunity not only for these companies but for the broader economy,” Global X’s Dessai said. “The biggest risk right now is underspending, especially if you are a category leader.”