Big Tech Loses *$1.35 Trillion* in Market Value as AI Skepticism Grows

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Leading tech companies have experienced massive selloffs over the past several weeks, losing more than a trillion dollars from their combined market valuations as investors have expressed concerns over increased AI spending.

CNBC reports that the tech sector faced significant turmoil as six of the industry’s largest companies saw their share prices fall sharply during the week ending Thursday. Microsoft, Nvidia, Oracle, Meta, Amazon and Google collectively lost $1.35 trillion in market capitalization, according to data compiled by FactSet. The dramatic selloff was triggered by investor concerns over the huge capital expenditure commitments these companies have made to AI infrastructure.

The decline came after a series of earnings reports that revealed continued massive spending plans by these technology giants, often known as hyperscalers in the industry. The announcement by Big Tech companies to invest $660 billion in artificial intelligence initiatives this year alone has raised eyebrows throughout the investment community. As reported, this figure is more than the entire GDP of several countries, including the United Arab Emirates, Singapore and Israel. financial Times.

Amazon emerged as one of the companies to announce the most aggressive capital expenditure plans during this earnings season. The e-commerce and cloud computing giant revealed plans to spend $200 billion, representing a 56 percent increase over the previous year. This figure exceeds market expectations and is the highest among hyperscaler companies.

Amazon shares saw a particularly steep decline, falling eight percent in morning trading on Friday. Other big tech giants have had similar or even greater success. Microsoft shares fell nearly 10 percent after its earnings release last week, wiping $350 billion off investors’ value.

The market reaction reflects a fundamental shift in investor sentiment toward artificial intelligence investing. Whereas investors once suffered from “fear of missing out” or FOMO, they now expect big tech to demonstrate a path to profitability based on massive AI spending.

Investment professionals warn that volatility may persist. Paul Markham, investment director at GAM Investments, told CNBC that shares of companies developing hardware for AI infrastructure buildouts will continue to experience volatility as the sentiment contagion takes hold. Markham noted, referring to large language model developments, “There will be persistent fear of the limits of capital expenditure, the ultimate returns on it, and the eventual overexpansion of capacity as a result of LLM build-out.”

The investment community is now facing a turning point in evaluating these technology stocks. Michael Fields, chief equity strategist at Morningstar, described the situation as bullishly binary. Field said, referring to the substantial investments in the so-called Magnificent Seven companies, “Either this investment will turn out to be a huge profit if it goes well, or it will be a huge waste of shareholder cash if it goes wrong.”

Interestingly, Apple offered a contrasting story during this turbulent period. The company, which has faced pressure from Wall Street regarding its artificial intelligence strategy and has historically committed far less in capital spending than its Big Tech peers, has seen its share price rise seven percent since Monday. The increase comes after strong quarterly results, which CEO Tim Cook described as “staggering” demand for the iPhone.