Business
AMAZON'S $220 BILLION AI BET SPOOKS WALL STREET AS CASH BLEEDS OUT
Amazon told investors its AI spending spree is only getting bigger — projecting about $220 billion in capital spending next year — and the market punished the stock for it.
Amazon rattled investors after reporting third-quarter results that showed the cost of the artificial intelligence buildout piling up fast. The e-commerce and cloud giant projected capital spending of about $220 billion next year and reported negative free cash flow of $42.4 billion over the past twelve months.
Shares of Amazon fell about 7% in pre-market trading Friday before paring losses to a 1.4% drop by the close, as investors weighed the spending surge against sales and profit results that missed expectations.
Amazon was not alone in spooking the market. Alphabet had already reported a sharp cash outflow of its own, and Meta reported cash burn in the September quarter last week, deepening a week of anxiety about whether the billions Big Tech has poured into AI infrastructure will deliver returns fast enough.
Microsoft stood out as the exception among the giants, announcing $18.6 billion in positive free cash flow for the past quarter — though even its stock is down about 4% from its record high earlier this month.
Together, Amazon and Intel were poised to lose roughly $300 billion in market value if their early losses held, according to Reuters, underscoring how quickly sentiment has turned on the AI trade.
Reporting: Reuters
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