Big Tech stocks sold off heavily after the companies unveiled plans to spend $660 billion (€560 billion) this year on artificial intelligence (AI), as investors fret that the “breathtaking” capital expenditures are outpacing the earnings potential of the new technology.
Amazon, Google and Microsoft are set to lose a combined $900 billion in market value since filing their quarterly earnings over the past week.
Shareholders balked at the sector’s gargantuan capex plans – more than the gross domestic product (GDP) of Israel – which overshadowed strong revenue growth at the companies’ cloud arms.
Along with social media giant Meta, their proposed outlay on data centres and specialised chips needed to train and run advanced AI models would mark a 60 per cent rise from the $410 billion they spent in 2025 and a 165 per cent increase from $245 billion in 2024.
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“The capex is breathtaking,” said Jim Tierney, head of the concentrated US growth fund at AllianceBernstein.
Even a 14 per cent boost to their combined annual revenue to $1.6 trillion was not enough to overcome the pessimism. Apple, which has sat out the AI capex arms race, was the only Silicon Valley behemoth to emerge unscathed, with shares up 7.5 per cent since it reported record sales.
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Amazon fell 11 per cent after market on Thursday after saying its capex will reach $200 billion this year – $50 billion more than expected – surpassing already eye-watering numbers from Google and Microsoft.
Chief executive Andy Jassy said such large sums were needed to position the company for a boom in AI, chips, robotics and satellites. He pointed to a 24 per cent growth in revenue at Amazon Web Services as evidence investment was starting to pay off.
Worst hit was Microsoft, which has fallen 18 per cent since it reported last Wednesday. Revenue at Microsoft’s cloud division rose 26 per cent to $51.5 billion. But this was slightly slower than expected and the market reacted to a 66 per cent surge in quarterly data centre spending.
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Microsoft also laid out for the first time its exposure to OpenAI. It disclosed that 45 per cent of its $625 billion book of future cloud contracts was from the start-up, leading analysts to flag its over-reliance on one customer.
Anna Nunoo, a senior analyst at AllianceBernstein, said this quarter’s earnings had brought a “shock in terms of the increased capex”.
“The onus is on Microsoft and Amazon to prove out the attractive returns on all the spending,” she added.
Even record earnings at Google were not enough to override these concerns. Parent company Alphabet surpassed $400 billion in annual revenue for the first time and made $132 billion of profit in 2025. But plans to double capex to $185 billion still knocked its shares.
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“AI bubble fears are settling back in,” said Brent Thill, an analyst at Jefferies. “Investors are in a mini timeout around tech, and nothing the companies say fundamentally matters.”
The spending plans also indicate that more time and money will be required to deliver the full promises of AI.
Higher capex “telegraphs that it may take longer for AI strategies to play out”, said Dec Mullarkey, managing director of $300 billion asset manager SLC Management. “Not welcome news for investors that are already fixated on when AI-related revenue will start to show up.”
Meta also said last week its capex would double to $135 billion, but the stock rose 10 per cent as the social media network showed how AI was improving advertising efficacy. However, it has since given up those gains as it was caught in a wider market rout that has pushed the tech-heavy Nasdaq down 4 per cent in the past five days.
Software stocks were hit due to fears about new AI coding tools from Anthropic and OpenAI disrupting their businesses.
Markets have also been rattled by confirmation that OpenAI’s $100 billion investment and infrastructure deal with Nvidia has not gone ahead.
Oracle, which relies on OpenAI for a large share of its future cloud business, dropped 18 per cent over five days even as it raised $25 billion in debt and insisted it was “highly confident in OpenAI’s ability to raise funds and meet its commitments”.
Apple stood out as the winner from the round of earnings.
The company reported a record $144 billion in quarterly revenue driven by a surge in iPhone 17 sales in the United States and China. Capex fell 17 per cent to $2.4 billion in the final three months of the year, giving it an annual total of about $12 billion.
In January, Apple struck a deal to use Google’s Gemini to overhaul its AI features, including its Siri voice assistant.
“Apple’s tiny capex is the AI dividend of partnering with Google for compute and frontier models,” said Dan Hutcheson, vice-chair of market intelligence firm TechInsights. “This shifts Apple’s AI capex to a pay-as-you-go model,” with the iPhone maker outsourcing most of the underlying infrastructure costs to Google.
The partnership “absolutely” explained some of Google’s increased capex plans for 2026, Hutcheson added.
Chipmaker Nvidia, the world’s most valuable public company, now faces a volatile market as it prepares to announce earnings later this month. After more than three years of being asked to stomach escalating capex, investors are looking for an imminent end to spending based on faith in AI.
“These are wild times,” said Drew Dickson, founder of Albert Bridge Capital. “We’ve evolved from an environment where capex alone was enough to trigger euphoria to one where the market expects it to translate into revenue growth in a time horizon that makes little sense.” – Copyright The Financial Times Limited 2026
