Major technology companies including Amazon, Google (Alphabet), Microsoft, and Meta have announced plans to spend a staggering $660 billion on artificial intelligence infrastructure and development in 2026, triggering a massive $900 billion selloff in their combined market value. The aggressive capital expenditure plans have reignited fears of a speculative bubble in the AI sector, with investors questioning whether returns can justify the unprecedented spending.
The selloff began immediately after earnings reports were filed. Amazon's stock dropped 11% after the company revealed its 2026 capex would reach $200 billion, significantly above the $150 billion analysts expected. CEO Andy Jassy defended the spending as necessary for AI, chips, robotics, and satellites, pointing to a 24% revenue rise at Amazon Web Services. Microsoft suffered an even steeper 18% decline after disclosing that its quarterly data center spending jumped 66%. While Microsoft's cloud revenue grew 26% to $51.5 billion, the market reacted negatively to what was perceived as insufficient growth acceleration. Alarmingly, Microsoft revealed that 45% of its $625 billion cloud contract backlog comes from just one customer: OpenAI.
Google-parent Alphabet also saw its stock decline despite announcing record 2025 profits of $132 billion and surpassing $400 billion in annual revenue for the first time. The company plans to double its capex to $185 billion this year, which was enough to spook investors. In July, Google had already announced a $25 billion investment over two years in data centers and AI infrastructure across states linked to the country's largest electric grid. The company has also tapped debt markets, recently selling $17.5 billion in US bonds after issuing €6.5 billion of notes in Europe.
Meta wasn't spared either, announcing its capex would double to $135 billion. Although shares initially popped 10%, they quickly gave back those gains. The entire tech sector has come under pressure, with the Nasdaq Composite dropping 4% over five days and falling 0.84% on Monday alone as technology stocks remained under pressure.
Industry leaders have expressed growing concern about the scale of AI investments. Alphabet CEO Sundar Pichai warned in a BBC interview that "no company is going to be immune" if the AI boom were to reverse, acknowledging that signs of "irrationality" had begun to emerge. Pichai compared the current cycle to the internet boom, noting that while there was "clearly a lot of excess investment" during the dotcom era, the underlying technology was still profound. "I expect AI to be the same," he said.
Klarna chief Sebastian Siemiatkowski echoed these concerns, telling the Financial Times he was "very nervous about the size of these investments in these data centers." Siemiatkowski holds shares in prominent AI companies including OpenAI, Perplexity, xAI, and Cerebras through his family office Flat Capital.
The market also reacted to the collapse of OpenAI's $100 billion deal with Nvidia, which sent Oracle shares down 18% over five days. Oracle, which is heavily tied to OpenAI for its future cloud business, raised $25 billion in debt but tried to reassure investors, saying it was "highly confident in OpenAI's ability to raise funds and meet its commitments."
Analysts are divided on whether the current environment represents a bubble. Richard Peterson, founder of MarketPsych, told Invezz that while many conditions for a bubble are present, the current environment remains "more disciplined than during the dotcom era." He noted that during the dotcom boom, "there were a lot of companies that had ideas but no revenue," whereas today's investments, while sometimes lacking clear profit paths, have been "somewhat sober comparatively."
Brent Thill, an analyst at Jefferies, observed that "AI bubble fears are settling back in. Investors are in a mini timeout around tech, and nothing the companies say fundamentally matters." Drew Dickson of Albert Bridge Capital added that the market has evolved "from an environment where capex alone was enough to trigger euphoria to one where the market expects it to translate into revenue growth in a time horizon that makes little sense."
Apple emerged as a notable exception to the trend, with shares rising 7.5% after reporting $144 billion in revenue last quarter driven by strong iPhone 17 sales. While its competitors are spending aggressively, Apple's capex actually fell 17% to $2.4 billion in Q4, totaling about $12 billion for the year. In January, Apple signed a deal with Google to use its Gemini model to power Siri and other AI tools, effectively letting Google handle the infrastructure while paying for usage.
All eyes are now on Nvidia, the world's most valuable public company, which is about to report earnings. After three years of watching tech giants spend endlessly on capex, investors are demanding tangible results and proof that these massive investments will generate adequate returns.
