AI stocks like Meta, Nvidia and Microsoft are sliding. Is it time to buy the dip?

[SINGAPORE] The artificial intelligence boom has propelled US technology giants to lofty valuations, but a recent sell-off has left investors questioning whether their massive spending on the technology will deliver sufficient returns.

Shares of major technology companies – including Alphabet, Amazon, Meta and Microsoft – have come under pressure as investors reassess AI infrastructure spending, cash flow and earnings expectations.

The Democrats’ victory in both chambers of Congress in the Nov 3 US midterm elections has added to uncertainty, raising the prospect of tighter scrutiny of AI companies and data centre developments.

For Singapore investors holding US megacap stocks, the question is whether the recent weakness presents a buying opportunity or signals further losses ahead.

Analysts say investors should look beyond falling share prices and assess the quality of a company’s earnings, its ability to monetise AI investments and whether its valuation offers sufficient upside.

What should investors look for?

One consideration is whether a company has a sufficiently strong earnings moat to sustain profitability even if AI demand disappoints, said an analyst from finance broker Moomoo.

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Investors should also consider whether AI spending is translating into revenue and whether companies can fund the investments through their own cash flow, said Gerald Wong, founder of investment advisory platform Beansprout.

The analysts gave their takes on the following big names:

Microsoft: The company is among the “clearest examples” of AI spending translating into returns, said Beansprout’s Wong. Its Azure cloud revenue jumped 48 per cent year on year to US$33.2 billion for its most recent Q1 earnings. Its capital expenditure, meanwhile, came in at US$45.2 billion against its estimate of US$45.9 billion. Moomoo’s analyst also pointed out Microsoft’s diversified revenue base. While Azure contributes to about 30 per cent of its revenue, the company’s broader commercial cloud business accounts for about 65 per cent of revenue. 

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Nvidia: The company appears to have a relatively inexpensive forward price-to-earnings basis, trading at 15.1 times its expected earnings, said Moomoo’s analyst. However, it is also more directly exposed to the AI infrastructure cycle. While this offers significant upside if demand for accelerated computing remains strong, its shares are also more sensitive to changes in AI capital expenditure and customer demand.

Apple: The company’s capital expenditure is less aggressive than others, and its shares have held up relatively well during the sell-off. However, investors should consider if it is over-valued, said Wong. 

Alphabet: The parent company of Google has strong momentum in its cloud business, with Google Cloud revenue increasing 103 per cent to US$30.7 billion in Q3. However, slower growth in its search business could pose a risk to its future earnings, Wong said. The company closed 12.6 per cent lower at US$283.82 on Oct 29 – its biggest single-day loss since the company listed in 2004. 

Amazon: Like Microsoft, Amazon also has diversified business streams, noted Moomoo. Its analyst pointed out that Amazon Web Services contributed about 18 per cent of Amazon’s revenue, with the remainder coming from retail, advertising and logistics. However, Beansprout’s Wong noted that Amazon carries greater financing risk. Its long-term debt rose from US$65.6 billion to US$173.1 billion in nine months, as at Sep 30, 2026.

Meta: The company also carries a larger financing risk than other tech counters, said Wong. He pointed out that it relies heavily on advertising returns and does not have a cloud business selling AI computing capacity to external customers. And while its revenue rose 26 per cent year on year in Q3, its infrastructure spending pushed its capital expenditure to US$34.91 billion and free cash flow below zero.

How should investors position their portfolios?

For investors building a broad-based portfolio, analysts say it is better to invest regularly than to try to predict when technology stocks will hit their lowest point.

“For most investors, investing regularly in a diversified portfolio makes more sense than trying to time the dip,” said StashAway’s head of macro and investment research, Justin Jimenez.

He remains constructive on AI’s long-term prospects and believes there is still “considerable room” for AI adoption to grow.

 Jimenez recommends that investors build a broad portfolio that allow them to benefit from AI’s long-term growth while spreading investments across sectors. This would help cushion the impact when AI stocks come under pressure, while also providing exposure to businesses that use AI to improve productivity over time, rather than just those developing the technology. 

However, investors with concentrated AI positions should reassess whether their exposure exceeds their risk tolerance and consider trimming their holdings if necessary, said Wong.

“We treat AI as a higher-conviction theme, so we limit how much of the portfolio goes into it rather than treating it as a core holding,” he said. 

“If it is within your limits, this is not a reason to panic-sell.” 

He added that investors should favour companies whose AI-related growth is backed by sustainable earnings, cash flow and reasonable valuations.