Amazon Hit as AI Capex Anxiety Spreads
Amazon shares fell more than 9% on Friday, extending a brutal week for Big Tech as investor concerns around AI spending discipline intensified.
The sell-off follows a string of earnings reports in which the largest technology companies signaled continued, and in some cases accelerating, capital expenditure tied to artificial intelligence infrastructure.
Amazon was the latest flashpoint.
The Numbers Spooking Wall Street
- Amazon expects capital expenditures to reach $200 billion in 2026
- That figure came in over $50 billion above analyst expectations
- Amazon, Alphabet, Microsoft, and Meta spent ~$120 billion on capex in Q4 alone
- Total Big Tech AI-related capex could exceed $660 billion this year
That level of spending rivals — and in some cases exceeds — the annual GDP of countries such as Singapore and Israel.
$1 Trillion Wiped From Big Tech
According to FactSet data, shares of:
- Amazon
- Microsoft
- Nvidia
- Meta
- Alphabet
- Oracle
have collectively lost more than $1 trillion in market capitalization over the past week.
Markets have not treated all spending plans equally. Meta and Alphabet were largely rewarded, while Amazon and Microsoft were sharply punished — a sign that investor tolerance for AI spending is no longer universal.
From FOMO to Forensics
Analysts say sentiment has flipped rapidly.
“We have suddenly gone from the fear that you cannot be last, to investors questioning every single angle in this AI race,” said Mamta Valechha of Quilter Cheviot.
Concerns now center on:
- Whether AI returns can justify the scale and speed of investment
- Risks of overcapacity in data centers
- Pressure on margins if demand growth disappoints
Downgrades and Structural Concerns
D.A. Davidson downgraded Amazon to neutral, citing:
- Escalating investment just to defend AWS leadership
- Risks that cloud rivals are catching up
- Fears that AI-driven interfaces could disrupt Amazon’s retail model
“We see AWS continuing to lose its lead and now scrambling to catch up through escalating investment,” the firm wrote.
A Stark Contrast: Apple
While AI-heavy names sold off, Apple shares rose 7% this week, helped by strong iPhone demand and a more restrained capex strategy.
That divergence is sharpening the market’s message:
discipline now matters as much as ambition.
WSA Take
The AI trade is entering a new phase.
For the past year, investors rewarded any company spending aggressively on AI infrastructure. That assumption is breaking down.
The bet has become binary:
- Massive upside if AI monetization scales as promised
- Severe value destruction if returns lag the capital deployed
Amazon’s sell-off shows Wall Street is no longer buying the story on faith alone.
Disclaimer
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