Investors are souring on the AI spending spree as Big Tech’s cash engines sputter. Alphabet, Amazon, Meta and Microsoft outlined more than $740 billion in capital outlays this year—largely earmarked for AI data centers and chips—only to meet a market newly focused on free cash flow and returns. The Nasdaq slid 2.9% Friday while chipmakers tumbled, with Nvidia off 4%, Broadcom more than 5% and Qualcomm 11%. Alphabet’s stock fell again after a record 12% drop wiped out $500 billion in market value; the company posted a $9.1 billion third-quarter free-cash-flow deficit while quarterly capex swelled to $51.4 billion and full-year spending could reach $205 billion. Google’s AI Mode, embedded in Search, is straining the economics of its ad franchise, where growth slowed to 12%. Amazon reported a $42.4 billion trailing 12‑month FCF shortfall alongside plans for roughly $220 billion in capex despite 39% growth at AWS. Meta turned negative FCF as well and guided up to $145 billion in capex, citing the compute intensity of its new Muse AI agent; ad revenue rose 26% but the stock slid 10%. The turn signals a market recalibration: from rewarding aggressive AI bets to scrutinizing leverage, cash burn and whether massive infrastructure builds can earn their keep.
Related articles:
Fears over $828 billion AI capex spending spree help erase $1 trillion in market value
The AI arms race is eating into Big Tech’s cash flow: Chart of the Day
