Big Tech companies lost nearly $900bn in market value after revealing soaring AI spending in the third quarter, turning historically profitable firms into cash burners. Amazon, Meta, Microsoft, and Alphabet saw shares tumble as capital expenditures nearly doubled to $207bn, driven by chips and data centres. Despite record investment, revenue growth in core businesses is slowing, raising concerns about the sustainability of the AI boom.
The four hyperscalers plan to spend another $232bn in Q4, pushing annual capex toward $740bn. Unlike previous years, these giants are now burning cash and issuing debt and equity to fund expansion. Amazon reported a record $75.8bn in capex and negative $33.5bn free cash flow, while Google, Meta, and Amazon together burned $45.2bn, reversing last year’s $36.4bn surplus.
Analysts warn the physical infrastructure limits may cap growth, and investors demand proof AI spending translates to revenue. The market’s harsh reaction follows Anthropic’s strong IPO filing, yet skepticism remains as Big Tech faces scrutiny over capital efficiency and long-term viability.
Source: Financial Times Companies · Summarized by HeadlinesBriefing