Shares of Amazon fell sharply after the company outlined plans to spend about $200 billion this year, intensifying investor worries over whether Big Tech’s massive investments in artificial intelligence will generate adequate returns. The move places Amazon among U.S. tech giants preparing to commit more than $630 billion to data centers and AI chips, an unprecedented level of capital spending.
While markets had anticipated higher investment as companies bet heavily on AI, analysts said the scale surprised investors and revived comparisons with the early 2000s dot-com boom, when infrastructure spending often outpaced profits. Amazon’s forecast implied a roughly 50% jump in outlays, prompting concerns that capital intensity is rising faster than revenue growth.
The reaction spilled across the sector. Shares of Microsoft and Alphabet also declined following earnings, as debates over AI-driven disruption weighed on software stocks. The S&P 500 software and services group has erased about $1 trillion in market value in recent weeks, underscoring the market’s unease.
Amazon executives defended the strategy, arguing that demand signals justify the spending and that returns from AI will outweigh the costs. Still, analysts cautioned that with hyperscalers shifting to more capital-intensive models, the margin for execution errors is narrowing as investors scrutinize profitability more closely.
