Big Tech Stocks Plunge as AI Bubble Fears Erase Over $1 Trillion in Value

Shares of major technology companies fell sharply over the past week in New York trading, erasing more than $1 trillion from their combined market values, according to data from FactSet.

Amazon.com Inc. led the declines with a 9% drop in its stock price on Friday, following a report of fourth-quarter earnings for 2025 that included plans for $200 billion in capital expenditures during 2026, mainly for its AWS cloud unit to support artificial intelligence infrastructure.

Microsoft Corp., Nvidia Corp., Oracle Corp., Meta Platforms Inc., and Alphabet Inc. also posted losses during the period leading up to Thursday's market close, with the group collectively shedding the trillion-dollar figure amid investor reactions to escalating costs tied to AI development.

Credit: Bloomberg

The sell-off extended to the broader software and services sector, where the S&P 500 index for those stocks declined 4.6% on Thursday alone, marking a seventh consecutive session of drops and a total market value reduction of about $1 trillion since January 28.

Amazon Chief Executive Officer Andy Jassy stated in the company's earnings release:

“With such strong demand for our existing offerings and seminal opportunities like AI, chips, robotics, and low earth orbit satellites, we expect to invest about $200 billion in capital expenditures across Amazon in 2026, and anticipate strong long-term return on invested capital.”

The figure exceeded analyst expectations of $146.6 billion and represented a jump from Amazon's $131 billion in capital spending during 2025.

Microsoft reported capital expenditures of $37.5 billion for its fiscal second quarter ending December 31, 2025, with Chief Financial Officer Amy Hood noting during the January 28 earnings call.

The broader industry push included announcements from Alphabet and Meta for similar increases, contributing to a combined forecast of about $650 billion in capital spending by the four companies for 2026.

The downturn coincided with releases from AI startup Anthropic PBC, whose new tools for legal contract review and software coding prompted concerns about disruptions to established business models in those fields.

Thomson Reuters Corp. experienced a record one-day stock plunge after the Anthropic plugin raised questions about its legal operations.

The rout affected non-U.S. firms as well, with shares of Arm Holdings Plc, London Stock Exchange Group Plc, Tata Consultancy Services Ltd., and Infosys Ltd. declining in their respective markets.

Amazon's premarket trading on Friday showed a 7% decline, while Alphabet slipped 0.7% and other affected stocks saw mixed low single-digit movements.