Why Wells Fargo Is Warning That Surging AI Token Costs Is a Death Knell for Hyperscaler Stocks Like Meta and Microsoft

For a few years now, artificial intelligence (AI) has been the market’s undisputed growth engine, powering massive gains for tech giants and fueling relentless investor optimism. However, a growing number of strategists are beginning to question whether the AI boom can maintain its current pace, with rising AI token costs emerging as a potential headwind for the sector. Among the skeptics is Wells Fargo (WFC) Chief Equity Strategist Ohsung Kwon, who recently warned that the market’s AI-fueled surge may be entering a more challenging phase.

“The sugar high rally is likely over,” Kwon said, describing the recent market pullback as a reminder that “nothing goes up every day, forever.” While he stressed that the current tech selloff was initially driven more by market positioning than weakening fundamentals, he pointed to what he sees as the most immediate risk to AI stocks is the end of “token-maxxing.” The concern centers on rising AI token costs as AI labs scale back subsidies that had previously helped keep usage expenses in check.