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Why investors are dumping tech stocks, in one image
Yahoo Finance • • business
Key Points:
- Big Tech leaders Amazon, Alphabet, Meta, and Microsoft have significantly increased capital expenditures (capex), rising by $36.9 billion in Q3 to $201.9 billion, more than doubling over the past year and up 356% since Q1 2024.
- Over the last three years, these companies have spent a combined $1.6 trillion on capex, while their combined free cash flow has declined sharply, falling $33.1 billion last quarter to a record negative $26.4 billion.
- Free cash flow among these tech giants has decreased by $88.2 billion over the past year, with only Microsoft reporting positive free cash flow in Q3.
- Investors are increasingly concerned about the sustainability of Big Tech’s growth projections, especially related to AI, as the companies plan to spend another $232 billion on capex in Q4 despite weakening cash flow.
- The AI sector experienced a major sell-off, losing over $1 trillion in market value on fears that profitability issues are undermining the AI growth narrative, according to market strategist Matt Maley.
