Big Tech's AI Spending Under Scrutiny Following Stock Market Decline

Last week's tech sector stock decline increased pressure on companies financing artificial intelligence investments. The market turmoil, which caused the Nasdaq index to retreat by 5.5 percent, triggered concerns over an artificial intelligence bubble along with anxieties such as borrowing costs and data center constraints. Despite this, current spending plans from tech giants like Alphabet, Microsoft, and Meta show no immediate step back from capital expenditures.

Google parent company Alphabet maintained its 2026 capital expenditure forecast between $195 billion and $205 billion during its October earnings call. Chief Financial Officer Anat Ashkenazi stated that spending will increase significantly in 2027, while the company reported a quarterly negative free cash flow of $9.1 billion. Microsoft recorded quarterly capital expenditures of $45.2 billion, and CEO Satya Nadella emphasized that they are building against a growing backlog. The company priced a $25 billion debt offering to finance various purposes, including capital expenditures.