Alphabet, Amazon, Meta, and Microsoft plan over $740 billion in 2026 capex for AI infrastructure, triggering a 2.9% Nasdaq drop and sharp tech stock pullbacks as free cash flows face heavy pressure.
Market crash and billions in losses
On Friday, the Nasdaq Composite Index fell 2,9% on concerns about investment in artificial intelligence. Chipmakers were particularly hard hit, with Nvidia down 4%, Broadcom down more than 5% and Qualcomm down 11%.
Alphabet, Google's parent company, had previously plunged 12% in a single day, losing $500 billion in market value. Amazon saw its stock fall 7% after its earnings report, while Meta had already posted 10% losses last week.
The problem with cash and expenses
The main issue is that many of these companies spend more money than they earn from their core activities.
- Alphabet reported negative cash flow of $9,1 billion in the third quarter, while Google's search advertising growth fell to 12%, marking the weakest pace in five quarters.
- Amazon recorded negative cash flow of $42,4 billion over the past 12 months and estimates that its investments this year will reach $220 billion.
- Meta recorded negative cash flow of $2,1 billion in the third quarter and expects investments of up to $145 billion this year.
The only exception was Microsoft, which posted positive cash flow of $18,6 billion in its latest quarter, with investments reaching $45,2 billion. The company said it spent less than its original forecast of $50 billion due to delays from partners.
Increased borrowing and new challenges
To meet the enormous costs of this growth, big tech companies have turned to borrowing. Specifically, Microsoft, Alphabet, Amazon, Meta and Oracle have collectively raised $326 billion in debt by 2026.
↳
READ ALSO
HACKS.GR / RELATED
AI Unlocked
Very few orders via artificial intelligence on DoorDash
↗
The climate is also affecting other companies in the space. Artificial intelligence company Anthropic has filed for an IPO, with Blackstone warning investors that the company may not be able to secure a high credit rating after its IPO.
G
HACKS.GR / GOOGLE SEARCH
Hacks.gr on Google
Set Hacks.gr as a preferred source.
Preferred source
↗
end of article
Top comments (0)