Expected $828 Billion in Spending Wipes More Than $1 Trillion Off Nasdaq 100 Companies’ Value
Key Facts
Companies listed in the Nasdaq 100 lost more than $1 trillion in market value on Friday, October 30, as technology shares fell amid investor concerns about the cost of expanding in artificial intelligence. Fortune estimated that five companies—Amazon, Alphabet, Microsoft, Meta and SpaceX, which includes xAI—will spend as much as $828 billion on capital expenditures in 2026. The estimate includes data centers, high-powered chips and other AI infrastructure, and is not limited to a separately disclosed AI spending line. Fortune described the spending as one factor behind the market decline, alongside Intel’s weak outlook for the final three months of the year. The Nasdaq Composite closed down 2.9%, while the S&P 500 fell 1.8% in its worst session since June.
Expected spending is distributed across Amazon at about $220 billion, Alphabet at as much as $205 billion, Microsoft at about $170 billion, Meta at as much as $145 billion and SpaceX at as much as $88 billion. The figures reflect the scale of sums companies are directing toward assets and equipment to support their technology expansion, according to Fortune estimates. The spending estimates do not mean that all five companies announced separate AI budgets of those amounts; the figure covers broader capital expenditures, including data centers, chips and other infrastructure. The four hyperscalers were responsible for more than a third of total capital spending by S&P 500 constituents over the previous 12 months, according to an estimate cited by Reuters from Capital Economics. The firm’s market economist said the spending boom at these companies now depends in part on external financing, adding to investor concern about the scale of spending and how it is funded.
Investors are focused on whether the investments will generate enough profit and productivity to justify their cost, as well as how quickly returns will emerge. The Associated Press reported that higher interest rates could slow the expansion of data centers, while the conversion of massive spending into commercial returns remains in question. An investment expert quoted by Reuters said the question that occupied the market during the week was “whether the investment in AI will generate a positive return, and if so, how long will it take.” He added that companies that failed to meet elevated expectations were punished by the market. The losses among Nasdaq 100 companies give the market another reason to monitor the impact of spending on liquidity and earnings, as that concern overlaps with companies’ results and forecasts.
Cash-flow data show differences among the companies: four of the five had negative free cash flow in the third quarter, while Microsoft was the exception, according to Fortune. Meta posted negative free cash flow of $2.1 billion in the latest quarter, after positive cash flow of $10.6 billion in the same period a year earlier. Amazon, meanwhile, recorded negative free cash flow of $42.4 billion over the previous 12 months and spent $94.8 billion on property and equipment, primarily through investments in AI technologies, the Associated Press reported. These figures reinforce the market’s focus on the gap between investing in infrastructure and companies’ ability to fund it from their operations. Microsoft remains the exception among the five in terms of free cash flow in the third quarter, despite turning to the bond market to finance needs that include capital spending.
Microsoft announced on Thursday a $25 billion bond offering, its first bond sale in more than nine years, according to Fortune. The company said potential uses of the proceeds include capital expenditures. The offering comes as major companies expand financing for the infrastructure needed for computing and AI, while investors monitor the extent to which this expansion relies on external financing. “If these tech companies sneeze, the rest of the market will get pneumonia,” an economist at Boston College told Fortune. The quote reflects these companies’ weight in market moves, given their responsibility for a large share of capital spending among index constituents.
Individual stock moves intensified Friday’s decline. Intel fell 28.6%, its biggest drop since 1974, after the company’s earnings forecast for the final three months of the year came in below analysts’ estimates, the Associated Press reported. The previous day, Alphabet shares fell more than 12%, their worst day ever, after the company said it had used more cash in the summer than in the spring. At the index level, the S&P 500 ended the session down 1.8%, its worst daily performance since June, and completed a third consecutive week of losses. The Nasdaq Composite fell 2.9% under pressure from technology shares, while a Reuters report said the index remained 7.8% below the record closing high it reached on October 6.
Alphabet reported a 25% increase in consolidated revenue to $127.6 billion in the third quarter, its 13th consecutive quarter of double-digit year-over-year revenue growth. But revenue performance came amid investor scrutiny of cash consumption and spending levels, after the stock fell more than 12% on October 29. The comparison between revenue growth and declining cash flow at some companies helps explain why the market is focused on returns and liquidity alongside business growth. As investors digest company results and forecasts, the questions reported by Reuters and the Associated Press remain centered on how quickly returns on AI investments will materialize and whether they can exceed their cost. The October 30 session remains an indicator of stocks’ sensitivity to any gap between massive spending plans and expectations for earnings and cash flow.