Big tech lost about a trillion dollars in value due to rising costs and investor outrage.

New capital plans for AI groups and investor reactions

The Nvidia chief may talk about the “future benefit” of deploying artificial intelligence, but investors are still watching how cloud giants raise their capex to $650 million. As a result, company market caps fell by roughly $1 trillion, and share prices dropped.

Amazon On Friday Amazon shares lost more than 5 %. Management announced that this year the company intends to double its capital spend to $200 million. Last year concerns already emerged about an “AI bubble” and potential decline in profitability of the internet giant.

Capital expenditures 2023–24 – In the fourth quarter last year Amazon, Alphabet, Microsoft and Meta collectively spent $120 million.

- For 2024 this amount is expected to rise to $650 million, exceeding the GDP of the UAE, Singapore and Israel.

Investors reacted positively to Meta’s and Alphabet’s forecasts, but shares fell for Amazon and Microsoft.

Overall market cap decline According to FactSet, over the past week the combined market cap of Amazon, Microsoft, Nvidia, Meta, Alphabet and Oracle shrank by more than $1 trillion. The largest loss was for Amazon – $300 million, despite its pledge to invest $200 million in AI infrastructure.

Analyst assessment GAM Investments notes that investor anxiety about capital spending and the payback timelines of AI projects will not disappear. The equity market will continue to face pressure from doubts over the justification of such investments.

Risks for Amazon Focusing on AI could threaten Amazon’s dominance in cloud services and reduce its online retail efficiency. AWS is trying to catch up with Microsoft and Google through higher spend, but competitors are already starting to outpace it. Users’ online purchases increasingly rely on Google and OpenAI chat‑bots, intensifying pressure on Amazon.

Morningstar highlighted that investors see the tech giants’ capex as a double evaluation: if the spending pays off – it’s justified; if not – companies will immediately be accused of “wasting” shareholders’ resources.