Source: Fortune
Summary
Alphabet’s shares plummeted 7% after the company reported a significant increase in capital expenditures and negative free cash flow, despite a strong increase in cloud-computing revenue. This has raised concerns among investors about the high spending on artificial intelligence (AI) by tech giants, including Microsoft, Meta, and Amazon. The shift in investor sentiment has led to a decline in the shares of these companies, with the Magnificent Seven index tumbling 4.8%. The scrutiny on capex spending is expected to continue, with earnings reports from Microsoft, Meta, Apple, and Amazon due next week.
Our Reading
The numbers tell one story.
Alphabet’s $205 billion capex plan has investors spooked. Microsoft, Meta, and Amazon are also spending big on AI, with a combined $724 billion planned for this year. The Magnificent Seven index has lost 3.7% in 2026, and chipmakers like Micron and Advanced Micro Devices are gaining at their expense. Apple’s more cautious approach to AI spending has rewarded investors, with its shares up 23% in 2026. The AI winter is coming, and investors are getting nervous.
It’s not just about the money; it’s about the business model.
Author: Evan Null
