As the market digests Big Tech’s ambitious artificial-intelligence spending plans for 2026, the relative cheapness of Microsoft’s stock underscores a new dichotomy in technology investing.

Microsoft’s stock is now cheaper than IBM’s, with the two trading at 23.0x and 23.7x forward earnings, respectively. Microsoft has been trading at a lower multiple than IBM since Jan. 29. Before this recent shift, the last time this had occurred was July 25, 2013, according to Dow Jones Market Data.

The inversion, first flagged by the X account of Fiscal.ai, points to a change in how investors are viewing Microsoft and the other tech companies that are shelling out billions to build AI infrastructure.

Microsoft, along with fellow hyperscalers Alphabet, Meta Platforms and Amazon.com, are expected to spend a combined$650 billionon capital expenditures in 2026 — a 60% increase from the amount they doled out in 2025 and $150 billion higher than original consensus estimates.

IBM was once the tech industry’s asset-heavy giant, operating as a manufacturer of chips and personal computers. IBM has since divested those businesses and put increased emphasis on its software and consulting divisions.

The increased spending from Microsoft and its peers will result in today’s leading tech companies owning more physical infrastructure, incurring higher expenses, generating less free cash flow and issuing more debt than they have done historically. The higher spending levels are now leading investors to wonder if Big Tech names can still command the high valuations that they had when their business models were more asset-light, according to Aaron Clark, portfolio manager at GW&K Investment Management.

“Markets are grappling with if these investments are worth it or not,” Clark told MarketWatch. “Is this a permanently higher shift, or is it a land-grab phase where free cash flows will eventually return to previous levels?” He noted that companies like Amazon and Meta could be on track to be free-cash-flow negative in 2026.

Microsoft’s stock has dropped nearly 14% since the company’s Jan. 28 earnings report, showing how investors have been displeased by the pace of Azure’s revenue growth relative to the company’s level of capex spending. Melius Research analyst Ben Reitzes downgraded Microsoft’s stock to hold on Monday, writing that he was “floored” that Copilot only had 15 million paid users “after three years of hype.”

According to FactSet consensus estimates, Microsoft is on track to put $115 billion toward capex in the 2026 calendar year.

However, Clark isn’t convinced that IBM will be able to sustainably command a higher valuation than Microsoft going forward, as he believes IBM is susceptible to many of the same AI headwinds. If enterprise-AI adoption struggles to gain traction, IBM’s consulting and integration services will also see diminishing demand.

Additionally, Microsoft’s financial position is relatively stable among the four major hyperscalers and Oracle. Microsoft is projected to be the only hyperscaler generating cash flow in excess of capex in the 2026 fiscal year, according to a note last week from Bank of America analyst Yuri Seliger.

Reitzes isn’t sure if Microsoft’s cash levels are necessarily a benefit for the company, though. Microsoft’s “business faces threats from AI, meaning it needs to increase its capex markedly to keep pace” with Alphabet and Amazon, Reitzes wrote. If the company “doesn’t increase spending now, it reflects either an execution issue or a need to manage earnings — neither is good.”