Oct 28 : The heavyweights of the AI industry are facing a reckoning on Wall Street, reflecting concerns over who will bear the cost of the artificial intelligence buildout that has fueled much of this year's stock market gains.

Anthropic revealed paperwork for its initial public offering on Monday, paving the way for a share sale reportedly worth $100 billion as early as next month.

Meta also unveiled a plan this week that could bring it as much as $97.5 billion through equity offerings over the coming months.

The markets will also await signs of fundraising plans when Microsoft and Alphabet report earnings later on Wednesday.

By pressing ahead with their enormous funding plans, the biggest AI players are wagering that investors' fear of missing out on future returns will outweigh their fear of overpaying for them.

AI stocks accounted for nearly 75 per cent of the S&P 500 index's return in the first half of 2026, according to an analysis by Carson Group.

"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 compound earnings at triple digits for multiple years seems to defy the laws of economics." But Wall Street's reaction in recent weeks suggests ambition is no longer enough to get investors to open their wallets.

Meta's shares have fallen more than 11 per cent since it unveiled plans last week to create a new class of stock to fund share sales and reported its first quarterly cash burn in more than a decade.

While Anthropic's soaring revenue helped ease AI growth concerns, its mounting losses have raised fresh questions. The company's net loss widened to $80.7 billion in the first half of 2026 from $13 billion a year earlier.

"Not even Anthropic will get a blank check," said Matt Kennedy, senior strategist at Renaissance Capital.

The funding demands are coming amid growing circular financing arrangements, in which money invested in AI companies can flow back to their investors through spending on computing infrastructure and services.

SMALLER FIRMS FEEL THE HEAT Companies that are relatively small but carry heavy debt are in a more bleak position. CoreWeave has seen its bond yields soar, raising questions about how much it would have to pay in interest when it raises debt next.

"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 hit their lowest since May 2025 as concerns about its reliance on debt grew.

The stock has rebounded around 10 per cent so far this week, but "a company surviving and its old shareholders winning are two different outcomes," Tuttle added.

SpaceX CEO Elon Musk recently said neocloud companies could face significant consolidation and failures. He ruled out any acquisition of a neocloud company by SpaceX, saying such a deal would be "pointless." Still, this year's AI capex by Amazon, Alphabet, Meta, Oracle and Microsoft would likely equal their cumulative spend since the November 2022 launch of ChatGPT, according to data from J.P. Morgan.

"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.