Big Tech has lost nearly $900bn in market value in a rout over rising AI spending, the Financial Times reported. Amazon’s third-quarter results on 29 October added to the pressure: its earnings and revenue both fell short of Wall Street forecasts, Deadline reported.
Key points
- Amazon earned $1.89 a share in the third quarter, against an analyst forecast of $1.97.
- Alphabet shares fell 12% on 29 October, erasing $500 billion in market value.
- Amazon’s trailing twelve-month free cash flow turned to a $42.4 billion outflow from a $14.8 billion inflow a year earlier, Yahoo Finance reported.
Amazon plans $220 billion in 2026 cash capex
Amazon’s third-quarter revenue rose 12% to $201.9 billion, below the $202.25 billion expected by analysts. Diluted earnings per share of $1.89 were also below the $1.95 recorded a year earlier. Amazon said in its earnings release that the earnings decline mainly reflected $9.5 billion in pre-tax gains from its investment in Anthropic in the third quarter of 2025, according to Deadline.
The company forecast fourth-quarter revenue of $240 billion to $247 billion, a range whose lower end sits below the $244.5 billion Wall Street estimate. Amazon shares fell as much as 9% in after-hours trading following the results. Investors were seeking evidence of returns on technology companies’ heavy AI spending.
Amazon attributed the swing in trailing twelve-month free cash flow chiefly to a $94.8 billion year-on-year increase in purchases of property and equipment, which it said largely reflected AI investment, Yahoo Finance reported. The $42.4 billion outflow compares with a $14.8 billion inflow for the twelve months ended 30 September 2025.
Chief executive Andy Jassy said on Amazon’s earnings call that the company still expected approximately $220 billion in cash capital expenditure for 2026, most of it for AWS, and expected to spend meaningfully more in 2027. AI Affairs had previously reported more than $77 billion in Amazon’s third-quarter spending as its AI buildout grew.
Jassy said in Amazon’s earnings release that AWS infrastructure and services spending helped drive 39% quarterly revenue growth and a projected annual revenue run rate of $184 billion, Deadline reported. He predicted revenue growth above 40% in both 2027 and 2028.
Alphabet loses $500 billion in market value
Alphabet’s 12% share-price fall on 29 October followed a third-quarter revenue miss and slower growth in its core search business. AI Affairs had previously reported that Search advertising growth slowed to 12% as Google expanded AI Mode ads internationally.
Google recorded a $9.1 billion free cash flow outflow in the quarter, against a Wall Street estimate for a $3.5 billion outflow, Yahoo Finance reported. Google’s quarterly free cash flow was weaker than Wall Street had estimated. Alphabet’s market-value loss came the next day.
Meta and SpaceX add to cash outflows
Meta recorded negative free cash flow in its third-quarter results for the first time since 2012, while SpaceX used about $9.9 billion in free cash flow during the quarter. Meta shares fell 5% over the week leading up to 29 October.
Evercore ISI strategist Julian Emanuel’s research puts expected free cash flow for a group comprising Meta, Amazon, Google, Microsoft, Oracle and SpaceX near negative $200 billion over the next year. The estimate concerns a future period rather than cash already spent.
