"Staggering" $660 billion in AI spending by bigtechs has heightened market anxiety about a bubble

Shares of major technology corporations fell sharply after the companies announced increased plans to invest hundreds of billions of dollars in the development of artificial intelligence. Combined, the Financial Times (FT) estimates that the US bigtechs are set to spend $660 billion for this purpose in 2026. Against this backdrop, Amazon, Google and Microsoft collectively risk losing about $900 billion in market capitalization since the publication of their quarterly reports last week, the FT calculated. Investors were alarmed by the large-scale cost plans, which overshadowed strong revenue growth in the companies' cloud divisions, the publication points out.

Amazon, Google, Microsoft and Ma's combined investment in AI data centers and specialized chips to train and run advanced AI models will grow 60% in 2026, up from the $410 billion the bigtech companies spent in 2025, and 165% from $245 billion in 2024, the Financial Times notes. "The capital spending looks staggering," said Jim Tierney, head of the U.S. Concentrated Growth Fund at AllianceBernstein.

Even the 14% growth in the bigtechs' total annual revenue, to $1.6 trillion, failed to dispel investors' pessimism. Thus, Apple, which is not in the AI capex race, was the only Silicon Valley tech giant to escape the selloff, the Financial Times noted. After the report was published, the company's shares rose 7.5% on reports of record sales.

- Meanwhile, Amazon shares were down 11% after the close of trading on Thursday, February 5. On that day, the company said its capital spending this year will reach $200 billion - $50 billion more than the market expected - exceeding the already impressive plans of Google and Microsoft. Amazon CEO Andy Jesse said such levels of investment are necessary to prepare the company for the boom in AI, chips, robotics and satellite technology. As proof, he pointed to Amazon Web Services' 24% year-on-year revenue growth, noting that the investment is starting to pay off.

- Microsoft was the hardest hit : the company's shares have fallen by 18% since last week's earnings release. Revenue from the company's cloud business grew 26% year-on-year to $51.5 billion, but fell short of expectations. The market also reacted negatively to the tech giant's jump in quarterly spending on data centers - up 66% year-on-year. Microsoft also revealed for the first time the extent of its reliance on OpenAI. The company said that 45% of its $625 billion portfolio of future cloud contracts is held by this AI company, prompting analysts to talk about its over-concentration on a single customer.

"This quarter was a real shocker in terms of capital expenditure growth," said AllianceBernstein senior analyst Anna Nunu. According to her, Microsoft and Amazon will now have to prove that such a scale of investment can provide an attractive return.

- Even Google's record financial results could not reduce market fears. The annual revenue of the parent company Alphabet exceeded $400 billion for the first time, in addition, the company received $132 billion of profit in 2025. Nevertheless, plans to double capital expenditures to $185 billion still put pressure on the stock. On February 5, they closed down 0.6%.

"Fears of a bubble forming around AI are coming to the fore again," Jefferies analyst Brent Till said. According to him, investors have "taken a pause" with regard to the technology sector, and financial statements of companies in the current situation have little impact.

- Meta in late January also announced plans to double its capital expenditure to $135 billion. The stock initially rose 10% after the company demonstrated how AI improves advertising effectiveness, but that rise was then completely reversed amid a broad market sell-off that sent the Nasdaq index down 4% in five days.

Rising costs indicate that more time and money will be needed to realize the promise of AI-related companies, notes Deke Mullarkey of SLC Management, writes the Financial Times. High capital expenditures by bigtechs signal that AI strategies may take longer to unfold than investors, already focused on the timing of AI revenue, expect, the analyst says.

In an additional blow to markets, it was confirmed that OpenAI's $100 billion investment and infrastructure deal with Nvidia never materialized. Shares of Oracle, which relies heavily on OpenAI to grow its cloud business, fell 18% in five days, despite raising $25 billion in debt and the company saying it has "high confidence" in OpenAI's ability to raise funding and fulfill its obligations.

- Against this background, Apple looked like the main winner of the reporting season, writes the Financial Times. The company reported record quarterly revenue of $144 billion, helped by a sharp increase in sales of iPhone 17 in the U.S. and China. Capital expenditure fell 17% to $2.4 billion in the final quarter of the year and totaled about $12 billion for the full year. In January, Apple struck a deal with Google to use the Gemini model to upgrade its AI features, including voice assistant Siri. "Apple's small capital expenditure is a kind of AI dividend from its partnership with Google on computing and advanced models," said Dan Hutcheson of TechInsights. He said Apple has effectively moved to a pay-as-you-use model, shifting much of the infrastructure costs to Google.

According to Hutcheson, the partnership "absolutely" explains part of the increase in Google's capital spending planned for 2026.

"These are very turbulent times," said Albert Bridge Capital founder Drew Dixon. "We've gone from a market where capex alone was enough for euphoria to a situation where the market is expecting them to grow revenue in a timeframe that doesn't look very realistic."

The consensus of analysts on Amazon's securities is positive, according to MarketWatch data: 70 analysts watching the company's securities advise to buy them, four - to hold. The market is also generally positive on Alphabet, with 68 analysts advising to buy the company's stock and 11 advising to hold. 60 analysts tracking Microsoft also recommend buying its securities, four recommend holding. 67 experts tracking Meta advise to look at buying the stock, six recommend to hold. Opinions are divided on Apple shares: 31 analysts advise to buy Apple shares, 17 advise to hold and two advise to sell.

This article was AI-translated and verified by a human editor