Everyone knows AI needs chips. For a while, investment dollars […]
Big Tech stocks started the new trading week mostly flat after a tough week that wiped out over $1 trillion from their market capitalizations.
On the other hand, Meta was down 0.2%, Amazon remained flat, Alphabet fell 0.5%, and Nvidia saw a decline of about 0.9% after a rebound of 7.9% on Friday.
Market worries intensified last week as major tech companies announced significant capital expenditure plans for 2026, driven by the boom in artificial intelligence.
Amazon, Alphabet, Microsoft, and Meta together reported a staggering $120 billion in capital expenditures for the fourth quarter of 2025. Projections suggest that these expenditures could soar to nearly $700 billion in 2026, which is more than the gross domestic product of countries like the United Arab Emirates and Singapore.
According to Jim Reid, head of global macro research at Deutsche Bank, last week marked the worst performance for the Magnificent 7 stocks since April. During that time, U.S. tariffs had a negative impact on the markets, leading to a decline of 4.66%.
The recent market activity reflects ongoing concerns among investors about the future profitability of these tech giants amid soaring expenditure forecasts.
Despite Amazon's significant drop of 5.55% on Friday, the overall Magnificent 7 stocks managed to increase by 0.45% that day.
Market analysts, including Justin Post from Bank of America Securities, noted that while there are potential stock volatility risks, management teams in these companies are confident in their ability to forecast demand accurately. They believe that capacity will be fully utilized in 2026.
Analysts from Morgan Stanley have indicated that there will be continued upward pressure on capital expenditure estimates for hyperscalers due to the increasing demand for cloud services.
As the demand for computing power surges, the overall cloud revenue for services like Google Cloud Platform (GCP), Amazon Web Services (AWS), and Microsoft Azure is expected to accelerate. This growth will likely result in further commitments to data centers and expansions in capital expenditures.
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