Big Tech Sheds Nearly $900 Billion as Soaring AI Spending Triggers Market Rout
29 Sources
[1]
US stocks slump as Alphabet revenue miss reignites AI capex jitters
This transcript was produced with AI technology that converts speech to text. The text is not always reviewed or edited by Reuters journalists and some errors may occur. US stocks slid on Thursday, with the Dow dropping a quarter of a percent, the S&P 500 shedding three-tenths of a percent and the
[2]
Big Tech sheds nearly $900bn in rout over soaring AI spending
Cash burn at Google, Amazon and Meta leads Wall Street to question price of AI boom Big Tech companies lost nearly $900bn in market value after another sharp rise in their spending in the third quarter, which has turned some of the most profitable businesses in history into cash incinerators as
[3]
Tech giants need legacy businesses to keep growing as they pour trillions into the AI buildout
* The more that hyperscalers continue spending big on artificial intelligence, the more they strain their core businesses as investors wait for potentially bigger payoffs. * Microsoft is the lone member of the group that's generating positive free cash flow, but its cash generation declined
[4]
US tech stocks see sharp falls over AI cost concerns
US stocks have continued to slide as concerns continue to intensify over the increasing costs of the artificial intelligence (AI) build out. Shares in Intel continued their overnight slide into early trading on Friday, falling as much as 30% after the chip maker warned of a weaker computer market
[5]
Intel's Shares Plunge 20% as A.I. Hinders Some Parts of Its Business
The chipmaker, whose largest investor is the U.S. government, reported that the A.I. boom's domino effect had hurt sales to personal computer makers. Intel, the chipmaker whose largest investor is the U.S. government, revealed on Thursday how the artificial intelligence boom has become a
[6]
The limits of hedging the AI boom
As tech investment soars, finding protection is becoming more urgent -- and harder As the spotlight on the AI trade intensifies, even the staunchest bulls are starting to sweat. After last week's sharp sell-off in global tech stocks, a relief rally now appears to be taking hold. But with
[7]
AI companies are desperate for cash and don't know where it will come from
The companies have been borrowing hundreds of billions of dollars, selling fresh stock and cooking up more novel and potentially risky new methods of financing. The biggest bet in the history of the United States keeps getting bigger and we're all hanging on for the ride. Technology companies
[8]
Nvidia's role as AI financier faces first big test as neoclouds take market hit
* As Nvidia has transitioned from chipmaker to industry financier, some investors see the company taking on outsized risk tied to the AI buildout. * Those concerns are showing up in the market with shares of neoclouds tanking and bond yields rising. * "If the demand for compute doesn't meet these
[9]
Big Tech's Data Center Blitz Is Burning Through Cash and Scaring Wall Street
Amazon on Thursday became the latest tech company to to announce swelling investments in A.I. amid stumbling share prices. Four of the tech industry's biggest companies set a new spending record in the last quarter as they raced to build artificial intelligence, leading to a worrisome new
[10]
Here's the 'core economic flaw' in the AI bull case as stock and bond trades unravel, top economist says | Fortune
Apollo Chief Economic Torsten Slok was on a warpath this past week, issuing a series of warnings about the AI boom as Wall Street retreated from the sector. On Tuesday, he pointed to the recent slowdown in token spending growth, saying the demand curve for compute is flat and highly sensitive to
[11]
Turmoil hits AI buildout as neoclouds face pressure, credit risks mount and Solidigm pulls IPO
* Concerns over the AI trade dragged the Nasdaq down this week, with neoclouds posting some of the steepest losses. * Debt markets are roiling, with Meta, Oracle, and Nvidia facing the largest-ever spreads on credit default swaps linked to their corporate bonds. * SK Hynix abandoned plans for an
[12]
Wall Street tech rout deepens on doubts over AI spending
New York (AFP) - Shares in US tech giants were pummeled on Friday, capping a week of earnings results that raised questions on Wall Street about whether the AI spending bonanza was sustainable. Microsoft, Alphabet and Amazon all reported quarterly results this week, and each signaled it would keep
[13]
Tech stocks down: Intel, Reddit, and Amazon are getting hammered. Has the AI reckoning arrived?
From massive spending on AI buildouts to search declines fueled by AI answer engines, America's technology giants appear to be losing investor confidence. There's one thing scaring investors today, and it's not Halloween. As of this writing, some of the biggest tech stocks are getting hammered in
[14]
Global Market: Wall Street's top asset managers bet big on AI infrastructure boom
Wall Street's leading alternative asset managers are ramping up investments in AI infrastructure, betting on long-term leases and creditworthy tenants to secure predictable returns. However, rising debt levels among neoclouds and concerns over AI spending returns are bringing private credit risks
[15]
Carlyle Flags a New AI Bottleneck: Power, Politics And Billions in Financing Needs - Carlyle Group (NASDA
The artificial intelligence boom is creating a growing financing challenge for the companies building its infrastructure, while power shortages, political opposition and rising hardware costs threaten to complicate further expansion. The investment firm estimates that 80% of AI-related capital
[16]
Explained: Why AI giants Google, Amazon, Intel shares crashed up to 23% in a single day
Shares of Alphabet, Amazon and Intel plunged on Thursday as investors fretted over rising AI spending, weakening cash flows and a subdued outlook. Alphabet shares fell over 13% after its Q3 results missed Wall Street estimates, with slowing search advertising growth and higher AI investments
[17]
AI Is Fueling a Private Credit Boom, But Moody's Sees a Debt Time Bomb Ahead - CoreWeave (NASDAQ:CRWV)
Moody's Ratings warned Tuesday that the artificial intelligence boom is creating new opportunities for private credit lenders while increasing risks tied to the industry's growing financing needs and interconnected relationships between technology companies. Spending on AI infrastructure is
[18]
Microsoft CEO says AI growth needs more than big customers
Three years ago, Microsoft (MSFT) was already a Wall Street behemoth. However, the steep rise of ChatGPT offered its investors a fresh reason to own its shares, offering a front-row seat to the artificial intelligence boom without betting on a startup. The wager paid off. A $10,000 investment in
[19]
AI Infrastructure Buildout: Why are Retail Investors Wary While Moneybags Isn't
Seldom have we seen investors of different hues having such diametrically diverse views as with the current datacentre buildout story Every AI company worth their model has articulated the demand for compute and inference for the technology to grow and get better. And the magic wand appeared to be
[20]
Cash takes centre stage as investors rethink AI spending boom
Investors are increasingly focused on technology companies' cash generation capabilities to fund artificial intelligence investments. Microsoft and Oracle are gaining positive attention from investors, while Alphabet faces challenges due to rising AI costs. Alphabet's spending has surpassed its
[21]
Bank of America warns AI debt could hurt 2027 stock market
Anyone checking their 401(k) this fall could be forgiven for thinking Wall Street has shaken off its worries. The S&P 500 ended October 22 at 7,623.68, up 11.4% for the year and just 2.5% below its October 6 record. More recently, however, the rally has lost some steam. After three years of
[22]
Ed Yardeni Says AI Bubble Is Deflating Without Bursting Amid Increasing Funding Scrutiny Around CRWV, NBI
Veteran Wall Street investor and Yardeni Research President Ed Yardeni dismissed fears of an imminent artificial intelligence bubble collapse Monday, arguing that tighter credit conditions could curb excessive spending without derailing the broader AI investment boom. Bond Markets Could Restrain
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AI: Bubble, Super-Cycle, or Both?
Why the hyperscalers' spending spree and circular AI financing deserve scrutiny, why the AI boom may still have years to run, and where the best investment opportunities may lie. Every great technology cycle tells two stories at once. The first is about the technology itself, which usually turns
[24]
AI industry funding: AI giants' funding ambitions test Wall Street's appetite for risk
The heavyweights of the AI industry are facing a reckoning on Wall Street, reflecting concerns over who will bear the cost of the artificial intelligence buildout that has fueled much of this year's stock market gains. Anthropic revealed paperwork for its initial public offering on Monday, paving
[25]
Nasdaq faces $2 trillion wipeout in October as AI spending fears deepen
Oct 30 (Reuters) - More than $2 trillion in market value is set to be wiped from the tech-heavy Nasdaq 100 this month, as Big Tech earnings intensified investor scrutiny of whether the billions being poured into artificial intelligence can generate returns quickly enough. The wipeout would amount
[26]
AI infrastructure: Big Tech turning to equity to raise funds for AI
Meta plans to raise up to $98 billion to fund AI infrastructure, making it one of the largest equity financing plans ever. Stocks worth only about $37.5 billion have been sold so far -- which includes common stock, along with a $12.5 billion offering of mandatorily convertible preferred
[27]
When AI works, everything's fine
When construction goes well, everything's fine. The saying long summed up real estate's role as an economic engine. However, on Wall Street, artificial intelligence is calling the shots. As technology giants take up more weight in the indexes, markets appear increasingly dependent on the prospects
[28]
The AI boom may transform the economy and still destroy capital, with stranded data centres and heavy investor losses
Investments in artificial intelligence by major companies have significantly increased in recent years. The overall investment in other sectors has shown minimal change during this period. AI's potential to enhance productivity suggests that current spending may benefit various industries like
[29]
AI financing driving private credit growth as refinancing risks rise, Moody's says
Oct 27 (Reuters) - High levels of borrowing to fund AI infrastructure is expanding private credit beyond traditional corporate lending, but a wave of loans coming due in the next few years could leave weaker borrowers struggling to refinance, Moody's Ratings said on Tuesday. Here are more
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Big Tech companies lost nearly $900 billion in market value after third-quarter earnings revealed capital expenditures almost doubled to $207 billion. Alphabet, Amazon, and Meta now burn cash instead of generating it, while slowing revenue growth in legacy businesses raises questions about the sustainability of their AI infrastructure investments.
Big Tech Faces Historic Market Rout Over AI Cost Concerns
US tech stocks experienced a dramatic selloff as Big Tech companies shed nearly $900 billion in market value following third-quarter earnings reports that exposed the mounting financial strain of AI infrastructure investments
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. The tech-heavy Nasdaq tumbled nearly 1.4% on Thursday and opened Friday at its lowest level in more than two months, down 2.5%1
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. Shares in the four major hyperscalers—Amazon, Meta, Microsoft, and Alphabet—all declined after revealing AI-related capital expenditures that almost doubled from a year earlier, raising alarm bells about slowing revenue growth in their core businesses2
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Source: BBC
AI Spending Doubles as Cash Flow Turns Negative
Collectively, capital expenditures for the big four hyperscalers rose to $207 billion in the third quarter from $113 billion a year earlier, mainly devoted to AI chips and data centers
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. Despite the negative market reaction, tech executives stuck to their plans to spend another $232 billion in the fourth quarter, potentially pushing total AI capex to $740 billion this year2
. The dramatic shift has turned some of the most profitable businesses in history into cash incinerators. Google, Meta, and Amazon, which generated $36.4 billion of free cash flow in the third quarter of 2025, together burned $45.2 billion of cash in the same period this year2
. Microsoft remained the lone hyperscaler generating positive free cash flow, though its cash generation declined 27% to $18.63 billion3
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Source: Market Screener
Alphabet Suffers Worst Single-Day Drop Ever
Alphabet's shares tumbled 13% on Thursday, wiping out half a trillion dollars in market value in the company's steepest decline ever
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. Investors reacted harshly to the Google parent's free cash flow falling to negative $9.1 billion from positive $24.5 billion a year earlier—only the second quarter of cash burn since it went public in 2004—as AI-related capital expenditures surpassed $50 billion2
. Google also reported a third consecutive quarter of slowing growth in its core search unit and a revenue miss that was compounded by accelerating AI-related cash burn1
. Executives admitted struggling to generate the same advertising revenue from its Gemini chatbot and AI mode answers versus its traditional list of links2
. Chief executive Sundar Pichai said the company could not bring new data centers online fast enough to satisfy demand for AI infrastructure investments2
.Amazon and Intel Extend Losses in After-Hours Trading
Amazon shares, which fell nearly 5% at the close, plunged another 7% in extended trading after forecasting fourth-quarter revenue largely below Wall Street estimates
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. The tech giant reported negative $33.5 billion free cash flow in the period as it boosted AI capex to a record $75.8 billion2
. A 39% rise in cloud sales at Amazon Web Services to $46 billion was not enough to justify the soaring AI spending to the market, erasing nearly $200 billion from its value2
. Growth slowed in both retail and advertising, with online sales gaining just 2% year over year, decelerating from 10% a year ago3
. Intel shares tumbled 20% in after-hours trading, then fell as much as 30% in early Friday trading, after the chipmaker warned of a weaker computer market despite plans to increase AI spending1
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. Intel reported that the AI boom's domino effect had hurt sales to personal computer makers due to memory chip shortages, with revenue projected at $15 billion to $16 billion in the fourth quarter, well below Wall Street projections of around $17 billion5
.Related Stories
Legacy Businesses Struggle to Fund AI Buildout
The tech megacaps are collectively placing a multitrillion-dollar bet that their AI infrastructure spending will result in many years of profitable growth, but for now they're reliant on legacy businesses—whether online advertising, business software, or e-commerce—to fund their AI ambitions
3
. Meta joined Alphabet and Amazon in reporting negative free cash flow of $2.12 billion, with AI capex expected to reach as high as $145 billion this year and analysts projecting it will pass $210 billion in 20273
. Investors sent Meta shares down 7% after earnings despite the company beating on revenue, and Meta followed by announcing plans to raise $95 billion in stock to support its AI infrastructure investments3
. Alphabet has taken on tens of billions in debt and in June announced plans to raise about $85 billion in its first share sale in more than two decades2
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Source: Benzinga
Investor Concerns Mount Over AI Spending Sustainability
Brad Reback, an analyst at Stifel, said investors are growing more demanding of Big Tech and want evidence that AI infrastructure investments are translating into new revenue: "The market is telling us that the cost of capital matters and it is getting harder on the margin to finance these sites"
2
. Brent Thill at Jefferies noted investors were spooked by good but not stellar earnings reports and growing concerns that limits of building physical infrastructure meant hyperscalers could not serve all their demand2
. The historic outlay on AI infrastructure across the tech sector is on track to exceed the percentage of US GDP spent on railroads or telecom and fiber2
. Shana Orczyk Sissel, founder and CEO of BanrÃon Capital Management, noted that while GDP is growing faster than expected due to AI-related growth, inflation is also rising faster for reasons unrelated to the AI buildout, putting consumers at a disadvantage1
. Rising interest rates are making it costlier for companies to raise debt, putting additional pressure on the financial impact of AI spending3
. Bernstein analyst Mark Shmulik dismissed the sell-off as a knee-jerk reaction but conceded investors are increasingly wary of another sizeable increase to AI-related capital expenditures next year2
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