Big Tech plans $740 billion in capital spending, but negative cash flow and rising debt rattled investors as the Nasdaq fell 2.9%.
Investors are growing wary of the AI spending boom just as Big Tech doubles down. Alphabet, Amazon, Meta and Microsoft outlined more than $740 billion in capital spending this year, TechCrunch reported. On Friday, the Nasdaq fell 2.9%, its biggest one-day drop since June. Here is where the cracks are showing and what could come next.
Chip Stocks Lead the Wall Street Sell-Off
The tech rout deepened on Friday as AI worries spread across markets. The Nasdaq closed 7.8% below its record high from October 6. Reuters said the selloff followed weak results from Intel and Amazon late Thursday. Intel plunged 28.6% after its report, and Nvidia fell 4.2%. Qualcomm lost about 11%, while Broadcom dropped more than 5%. Server makers Dell and HP also sank by roughly 11% and 10%. Amazon pared its losses as the session went on.
Alphabet also suffered. Its shares fell more than 12% on Thursday, its worst day on record. That wiped out roughly $500 billion in market value, and the stock fell again on Friday.
Alphabet Free Cash Flow Turns Negative
Alphabet offered the clearest warning this week. It reported negative free cash flow of $9.1 billion in the third quarter. That was its second straight quarter in the red, as quarterly capital spending rose to $51.4 billion. Free cash flow is the cash left after a company pays for its investments.
The company expects to spend up to $205 billion this year. Furthermore, it expects spending to keep rising in 2027. Meanwhile, Search advertising growth slowed to 12%, its weakest pace in five quarters. Search brings in roughly half of Alphabet’s revenue, so the slowdown matters. Even so, Google Cloud revenue jumped 103% to $30.7 billion, which shows that demand remains strong.
Amazon and Meta Burn Cash on AI Capex
Amazon posted negative free cash flow of $42.4 billion over the past 12 months, TechCrunch reported. A year earlier, the figure was positive $14.8 billion. The company still expects about $220 billion in capital spending this year. Amazon also narrowly missed analyst forecasts for sales and earnings per share. Even so, its cloud unit, AWS, grew 39%.
Meta also burned cash, with negative free cash flow of $2.1 billion in the third quarter. Its revenue rose 26% to $64 billion, TechCrunch reported. However, costs jumped 68%, and Meta guided to as much as $145 billion in capital spending. To raise funds, Meta plans to issue non-voting shares, its finance chief said.
“…create a new class of non-voting capital stock…” — Susan Li, Chief Financial Officer, Meta
Microsoft Stands Apart on Cash Flow
Microsoft was the exception among the four. It reported record revenue of $92.3 billion, up 19%, and spending of $45.2 billion on capital projects and leases. That was below the $50 billion it had projected. Its free cash flow stayed positive at $18.6 billion. Azure brought in $33.2 billion, and contracted future revenue rose 73% to $677 billion. Microsoft’s finance chief blamed late deliveries of third-party capacity for the lower spending. Cloud demand stayed strong across Google, Amazon and Microsoft. However, investors focused on the cost of meeting that demand.
Debt and Anthropic’s IPO Add Pressure
Borrowing now helps pay for the build-out. Microsoft, Alphabet, Amazon, Meta and Oracle raised a combined $326 billion in debt in 2026. S&P Global Market Intelligence compiled that figure. TechCrunch said it is triple last year’s total [UNVERIFIED — SOURCE NEEDED].
Anthropic’s IPO adds another test. The company filed to go public on Monday and plans to list under the ticker ANT. Its SEC filing showed $16.3 billion in revenue for the first half of 2026. It also warned that it may not sustain profitability. The Financial Times reported Friday that Blackstone warned investors Anthropic might not earn an investment-grade rating after listing. That could make Anthropic lean more on cloud giants and outside lenders for computing power.
Ultimately, the AI spending boom still has strong demand behind it. Yet investors now want proof that returns will cover the costs. Companies with weak cash flow and rising debt face the toughest questions. The coming quarters will show whether confidence returns or the cracks widen.
