AI investment and spending trends

What happened: Microsoft (MSFT) spent $116 billion on AI capital expenditure in fiscal year 2026, 4.5 times more than its $6.8 billion dividend payout. Novo Nordisk (NVO) partnered with Amazon Web Services (AWS) to accelerate drug discovery using AI. SoundHound AI (SOUN), a voice AI specialist, is betting on AI to drive profits. Meanwhile, corporate AI investments pushed bond issuance to $1.7 trillion YTD, a 27% increase, with Vertiv and Palantir among issuers.

Market impact: Tech and healthcare companies are ramping up AI spending, driving capital expenditure growth. This increased demand for capital pushed bond issuance higher, raising costs for all issuers. Palantir's high P/E ratio (149) may face multiple compression due to AI-related risks. AI-focused companies like SOUN could see increased scrutiny on their profit margins.

What to watch next: Microsoft's earnings report on January 24, 2023, will provide insights into its AI spending strategy. Novo Nordisk's partnership progress with AWS will be key to watch in Q1 2023. Palantir's earnings on February 16, 2023, will offer clarity on its AI-related risks and potential multiple compression.