Hyperscaler Cash Burn Collapses Tech Stocks as Wall Street Absorbs AI Infrastructure Bills
Technology stocks absorbed another heavy sell-off as investors reacted to escalating capital expenditures for artificial intelligence infrastructure. Alphabet, Amazon, and Intel shares faced steep declines in extended trading, driven by rising spending and deteriorating cash flows that missed Wall Street expectations, Yahoo Finance reported.
Amazon reported a trailing 12-month free cash flow outflow of $42.4 billion, compared to an inflow of $14.8 billion for the period ending September 30 of last year, according to Yahoo Finance. The Economic Times noted that Amazon shares fell more than 4% after the company posted earnings of $1.89 per share, missing the $1.96 analyst estimate from LSEG, with revenue reaching $201.94 billion against expectations of $202.31 billion.
Alphabet Reports Negative Free Cash Flow as Capital Expenditure Surges
Alphabet posted negative free cash flow of $9.1 billion for the quarter, surpassing Wall Street estimates for a negative $3.5 billion, Yahoo Finance reported. The Economic Times added that the figure marked the company’s second consecutive quarter of negative free cash flow following a $5.9 billion outflow in the June quarter.
Capital expenditure at Alphabet surged to $51.4 billion, more than double the amount spent in the same period last year, as the company expanded data centers and computing infrastructure, according to The Economic Times. The sell-off wiped more than $500 billion off Google’s market value on Thursday after shares plunged more than 13% in what The Economic Times reported as the company’s worst-ever single-day performance.
Intel Shares Drop Following Subdued Fourth Quarter Forecast
Intel shares dropped more than 23% in extended trading on Thursday after the chipmaker issued a subdued fourth-quarter forecast tied to continuing weakness in the global personal computer market, The Economic Times reported. The company’s client computing and physical AI group saw revenue decline 5% year-on-year to $8.1 billion.
Counterpoint Research data cited by The Economic Times showed global PC shipments fell 4% year-on-year in the second quarter as memory and component costs surged. Intel finance chief David Zinsner stated in the release that the PC slowdown is expected to persist at least through the first half of next year.
Projected Capital Expenditures Through 2027
Amazon CEO Andy Jassy addressed future spending during an earnings call, stating that the company still expects 2026 cash capital expenditures of approximately $220 billion, with the majority allocated to Amazon Web Services, and plans to spend meaningfully more in 2027, Yahoo Finance and The Economic Times reported. Jassy added that Amazon maintains a clear line of sight to attractive financial returns from these investments.
Evercore ISI strategist Julian Emanuel noted that hyperscaler free cash flow will likely stay negative. Emanuel’s research shows that the hyperscaler cohort consisting of Meta, Amazon, Google, Microsoft, Oracle, and SpaceX is projected to reach near negative $200 billion over the next year, according to Yahoo Finance.
Frequently Asked Questions About Tech Sector Cash Flows
What was Amazon’s trailing free cash flow total?
Amazon reported a free cash flow outflow of $42.4 billion for the trailing 12 months, driven by a year-over-year increase of $94.8 billion in property and equipment purchases, Yahoo Finance stated.
How much capital expenditure does Amazon project for future years?
Amazon CEO Andy Jassy stated on an earnings call that the company expects 2026 cash capex of approximately $220 billion and plans to spend meaningfully more in 2027, according to Yahoo Finance and The Economic Times.
What were Alphabet’s capital expenditures in the recent quarter?
Alphabet capital expenditures reached $51.4 billion, more than double the amount spent in the corresponding quarter last year, as reported by The Economic Times.
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