What changed
US technology shares fell for a second straight day as investors questioned whether enormous artificial-intelligence spending can deliver enough returns. Intel dropped 28% on Friday, Alphabet fell another 1.4% after a 12% slide Thursday, and the Nasdaq suffered its worst monthly decline since March 2025.
The numbers behind the sell-off are stark:
- Meta, Alphabet, Oracle, Amazon and Microsoft have committed $800bn to spending in 2026.
- Alphabet expects to invest up to $205bn this year, almost entirely on AI.
- Amazon has committed $220bn.
- Intel lost more than $130bn in market value on Friday. Alphabet lost more than $500bn on Thursday.
Why it matters
The market is no longer rewarding AI spending simply because it is large. It wants proof that the spending will produce cash.
That proof is arriving unevenly. Alphabet said its AI search summaries were affecting core search advertising revenue, even as it prepares to spend up to $205bn. Amazon reported spending six times more cash than it had three months earlier and finished Friday down 1.4%. Intel plans to increase AI equipment spending while facing weaker computer demand and lower-than-expected fourth-quarter revenue.
That creates a difficult equation: the companies are building expensive data centres, networks and servers before the financial payoff is clear. Investors are now treating a bigger AI budget as a possible warning sign as well as a growth signal.
The immediate fear is a broader slowdown in AI investment. That remains uncertain. But the sell-off shows that the sector’s central promise has changed from “AI will transform everything” to a much harder question: when will the transformation pay for itself?
Comments
No comments yet.