AI spending boom now bigger than the dotcom bubble but cracks are beginning to show, leading bank warns

Corporate AI spending has surpassed the highest of the precocious 1990s dotcom roar successful standard comparative to the US economy, but a backlash against soaring costs is opening to look arsenic companies observe that encouraging unit to usage AI freely is proving acold much costly than anticipated, according to Jefferies.

Investment successful US accusation processing instrumentality and bundle deed a grounds 4.91% of gross home merchandise successful the archetypal 4th of 2026, exceeding the erstwhile highest of 4.46% reached astatine the tallness of the dotcom bubble successful 2000, with AI-related spending contributing 1.34 percent points to annualised US economical maturation of 2% successful the aforesaid period.

Yet Jefferies, penning successful its Greed & Fear note, flags increasing signs of a firm rethink, pointing to reports that Microsoft has begun cancelling interior licences for Claude Code, an AI-powered coding instrumentality made by Anthropic, and reverting to its ain GitHub Copilot product.

Uber's main exertion serviceman reportedly warned internally that the institution burned done its full 2026 AI fund successful conscionable 4 months.

The culprit is simply a improvement Jefferies dubs "tokenmaxxing", a word derived from the mode AI models complaint for their output, measured successful units called tokens, akin to however a printer charges per page.

As companies rewarded unit for precocious AI usage done interior leaderboards, employees began moving up AI bills connected unnecessary tasks simply to inflate their scores, generating costs without productivity gains.

Cloud work providers are meantime raising prices by astir 30% twelvemonth connected year, compounding the unit connected firm budgets astatine a clip erstwhile the outgo of AI output per token has been falling overmuch faster than the underlying outgo of computing power.

Jefferies notes that Anthropic, the AI institution down Claude, has seen its annualised gross tally complaint surge from $9 cardinal astatine the extremity of 2025 to implicit $44 cardinal by aboriginal May 2026, illustrating some the standard of firm AI adoption and the associated outgo load being absorbed crossed the economy.

Despite the outgo pressures, determination is nary motion of the broader infrastructure spending question slowing, with the Philadelphia Semiconductor Index, a gauge of spot institution stocks, up 80% year-to-date and trading 64% supra its 200-day moving average.

Jefferies' basal lawsuit is that a important magnitude of superior volition yet beryllium destroyed successful the existent AI spending cycle, drafting a parallel with the dotcom boom-bust and the 19th-century railway mania.

The slope besides invoked Amara's Law, the rule that radical thin to overestimate a technology's short-term interaction portion underestimating its semipermanent consequences.

The biggest winners truthful acold stay the makers of representation chips, with SK Hynix and Micron some surpassing $1 trillion successful marketplace capitalisation this week.