Amazon Shares Slide as $600 Billion AI Spending Spree Sparks Fresh Tech Selloff Fears

Summary

Amazon’s stock fell sharply after reports that Big Tech’s AI spending plans are ballooning — with Amazon’s capex possibly approaching $200 billion by 2026 and the sector set to spend over $600 billion on AI this year. Investors worry that such scale of investment could crush margins, drain free cash flow and take years to produce meaningful returns, prompting analysts and brokerages to cut price targets. The selloff affected peers including Alphabet, Microsoft and Meta, as markets reassessed the risk that massive AI outlays may not translate into near-term profit.

Key Points

Reuters said Amazon’s capital expenditure could climb towards $200bn by 2026, alarming investors.
Big Tech is expected to spend more than $600bn–$630bn on AI this year, increasing market anxiety about returns and margins.
Concerns that AI advances may erode traditional software demand are heightening the risk of a broader sector valuation reset.
AWS remains large ($140bn+ cloud revenue) but growth rates lag faster-growing rivals, limiting investors’ patience for heavy capital intensity.
At least five brokerages trimmed Amazon price targets after the results, reflecting renewed valuation pressure.

Why should I read this?

Short version: if you care about tech stocks, pensions or your portfolio, this is the headline that explains why markets suddenly turned sour. It’s a quick take on whether the AI spending race is a strategic masterstroke or a margin-sapping arms race — and why investors are twitchy right now.

Context and Relevance

This piece matters because it pins a concrete figure to the AI investment debate and shows how capital-intensive the race for AI leadership has become. For executives and investors it highlights the tension between long-term platform bets and short-term earnings pressure. The story ties into broader trends: rising cloud competition, faster product iteration from rivals, and the risk that AI could disrupt existing software economics rather than simply add a new revenue stream.

Author style

Punchy analysis with a market-focus: the article flags immediate investor reactions and the balance-sheet implications of an industry-wide AI spending surge. Read the detail if you want to understand the near-term risks to valuations and which metrics (capex, free cash flow, growth rates) to watch next.