Big Tech's $1 Trillion Wipeout: When AI Spending Scares Investors

More than $1 trillion vanished from Big Tech market caps last week. That's equivalent to wiping out the entire value of companies like Tesla and Berkshire Hathaway combined.

The Spending Spree That Spooked Wall Street

Amazon, Google, Microsoft, and Meta collectively spent about $120 billion on capital expenditures in Q4 alone. Their 2026 spending could hit $700 billion – more than the GDP of countries like the UAE, Singapore, or Israel.

The problem? Nobody knows when this massive bet will pay off. Deutsche Bank's Jim Reid called it "the worst week for Magnificent 7 stocks since April."

The AI Infrastructure Gold Rush

Nvidia CEO Jensen Huang defended the spending frenzy, telling CNBC that demand for computing power is "sky high." The numbers back him up – cloud revenues exceeded expectations across the board.

But investors aren't buying the optimism. UBS's David Lefkowitz noted that "well above consensus" spending guidance "overshadowed stronger-than-expected cloud growth."

Winners and Losers in the AI Arms Race

Winners: Data center component suppliers are seeing "accelerating demand," according to Morgan Stanley. The infrastructure buildout creates a massive opportunity for hardware providers.

Losers: Investors seeking immediate returns. Amazon plunged 5.55% on Friday despite strong cloud performance.

Mixed signals: Oracle and Microsoft bucked the trend Monday morning, rising 1.6% and 0.8% respectively.

The Margin vs. Growth Dilemma

Bank of America's Justin Post highlighted the central tension: cloud companies are seeing "growing margins" alongside "potential stock volatility." Management teams express confidence about 2026 demand, but markets remain skeptical about the timeline.