Big Tech shares got dumped after companies laid out plans to spend $660bn this year on AI, with investors worrying the “breathtaking” bill is outrunning what AI can actually earn.
Amazon, Google and Microsoft are on track to shed a combined $900bn in market value since reporting quarterly earnings during the past week.
Shareholders recoiled at a capex feast bigger than Israel’s GDP, even as the cloud divisions posted sturdy revenue growth.
With Meta in the mix, planned spend on data centres and specialised chips would be a 60 per cent jump from the $410bn spent in 2025 and 165 per cent higher than the $245bn spent in 2024.
A 14 per cent lift in combined annual revenue to $1.6tn still failed to calm nerves.
Amazon shares sank 11 per cent after-hours last night after it said capex will hit $200bn this year, about $50bn more than expected and ahead of the already wild numbers from Google and Microsoft.
Amazon chief executive Andy Jassy said the cash splash is needed to position the firm for a boom in AI, chips, robotics and satellites, citing 24 per cent AWS revenue growth.
Microsoft took the nastiest hit, sliding 18 per cent since it reported last Wednesday, despite cloud division revenue rising 26 per cent to $51.5bn.
The market still flinched because the growth was slightly slower than expected and quarterly data centre spending jumped 66 per cent.
Microsoft also put numbers on its OpenAI exposure for the first time, saying 45 per cent of its $625bn book of future cloud contracts comes from the start-up.
Google’s record earnings could not drown out the capex anxiety, even after Alphabet topped $400bn in annual revenue for the first time and booked $132bn profit in 2025.
Plans to double capex to $185bn still weighed on the shares, as investors apparently prefer AI miracles that come with a receipt and a deadline.
The spending binge suggests it will take longer and cost more to get from flashy demos to proper AI revenue.
Meta said last week its capex would double to $135bn and the stock initially rose 10 per cent as it showed AI boosting ad performance.
Those gains then evaporated in the wider sell-off, with the Nasdaq down four per cent across the past five days.
Software names took a hit on fears that new AI coding tools from Anthropic and OpenAI will barge into their turf.
Markets were further rattled by confirmation that OpenAI’s much-touted $100bn investment and infrastructure deal with Nvidia is not happening.
Oracle, which counts on OpenAI for a chunky slice of future cloud business, dropped 18 per cent in five days even as it raised $25bn in debt and insisted it was “highly confident in OpenAI’s ability to raise funds and meet its commitments”.
Nvidia now heads into its next earnings with the market in a foul temper, after years of investors being told to swallow escalating spend on faith.
