Wall Street Loses Patience With Big Tech’s AI Spending Spree

The anxiety triggered a sharp decline in major indices on Friday, with the Nasdaq dropping 2.9%. Chipmakers faced the heaviest losses: Nvidia fell 4%, Broadcom dropped more than 5%, and Qualcomm slid 11%. Alphabet, which saw $500 billion in market value evaporate following a 12% drop on Thursday, continued its descent as markets questioned the long-term viability of its capital-heavy strategy.

Alphabet reported negative free cash flow of $9.1 billion for the third quarter, even as quarterly capital expenditures hit $51.4 billion. The company faces a structural dilemma: its AI-powered Search features are cannibalizing its core advertising revenue, which grew at its slowest pace in five quarters. Amazon and Meta are navigating similar pressures, with Amazon reporting negative free cash flow of $42.4 billion over the past year and Meta burning $2.1 billion in the third quarter alone.

Microsoft remains the outlier, posting $18.6 billion in positive free cash flow, though the company attributed lower-than-expected spending to capacity delays rather than a strategic pivot. The scale of this investment is increasingly funded by debt, with major tech firms raising $326 billion in 2026, tripling the previous year's total. This cooling investor sentiment threatens to complicate upcoming market entries, including the highly anticipated IPO of Anthropic, which may struggle to secure favorable credit ratings as it seeks the massive compute power required for its growth.