Investors are growing anxious about AI infrastructure spending even as Alphabet, Amazon, Meta, and Microsoft commit over $740 billion to capital expenditures this year.
The four companies outlined plans focused on data centers and chips. The Nasdaq fell 2.9% on Friday, with chip stocks hit harder: Nvidia dropped 4%, Broadcom fell more than 5%, and Qualcomm fell 11%. Alphabet fell again after plummeting 12% on Thursday, erasing $500 billion in market value.
Big Tech companies that once generated strong free cash flow from core businesses are now burning cash as AI infrastructure spending balloons. Alphabet reported negative free cash flow of $9.1 billion in the third quarter, its second consecutive quarter in the red, even as quarterly capex reached $51.4 billion. The company expects to spend up to $205 billion this year, with spending rising further in 2027.
Google's Search advertising business, which represents roughly half of Alphabet's revenue, saw growth slow to 12%, its weakest pace in five quarters. CEO Mark Zuckerberg told investors that Meta's new Muse AI agent is "very compute-intensive to run," contributing to Meta's negative free cash flow of $2.1 billion in the third quarter. Meta guides to as much as $145 billion in capex this year.
Amazon reported negative free cash flow of $42.4 billion over the past 12 months, compared with $14.8 billion in positive free cash flow the year prior. The company expects to spend $220 billion in capex this year. AWS revenue grew 39%, but Amazon's stock tumbled 7% after earnings.
Microsoft recorded $18.6 billion in positive free cash flow in its latest quarter with capex at $45.2 billion, less than the $50 billion it projected. Microsoft attributed the lower spending to delays in capacity from third-party providers.
According to S&P Global Market Intelligence, Microsoft, Alphabet, Amazon, Meta, and Oracle raised a combined $326 billion in debt in 2026, triple the amount raised the previous year.
Anthropic filed to go public earlier this week, but Financial Times reported Friday that Blackstone warned investors the AI company might not qualify for an investment-grade rating after its IPO, potentially making it more reliant on hyperscalers and third parties to fund infrastructure.