Cracks are emerging in the AI spending boom
Summary
- Alphabet, Amazon, Meta, and Microsoft plan to spend over $740 billion on capital expenditures this year for AI infrastructure.
- Investors are growing concerned over negative free cash flow, mounting debt, and whether AI investments will yield sufficient returns.
- Market anxiety caused sharp stock drops for major tech firms and chipmakers, including Nvidia, Broadcom, and Qualcomm.
- Alphabet's AI Search features are impacting its core advertising economics, reporting negative free cash flow of $9.1 billion in Q3.
- Big Tech companies have raised $326 billion in debt in 2026 to help fund their massive AI infrastructure spending.
Why it matters
Escalating capital expenditures and negative free cash flows from Big Tech's AI infrastructure push are spooking investors and threatening market stability.