Big Tech earnings week tests AI spending nerves after Nasdaq's worst day since June
The Nasdaq fell 2.6% on AI spending fears. Alphabet, Microsoft and Amazon report this week as the Fed meets Wednesday, and Big Tech must reassure.
Darlings, the most glamorous stress test in finance opens this week.
The Nasdaq Composite fell 2.6 percent on Thursday, Oct. 22, its steepest drop since a 4.2 percent tumble on June 5, according to Al Jazeera. The S&P 500 slid 1.2 percent. Meta dropped nearly 7 percent after raising its projected 2026 capital spending to $135bn to $145bn while its net profit missed expectations. Amazon fell 4.6 percent, Nvidia 4.4 percent, Alphabet 3.1 percent and Microsoft 2.2 percent. Only Apple rose, up 1.2 percent. The Nasdaq now sits about 5.8 percent below its Oct. 6 record, and it posted a slim loss on Friday.
Now the bosses answer. Alphabet and Microsoft report Wednesday, the same day as the Fed's rate meeting, and Amazon is on the calendar too (the day is not given), along with about a third of the S&P 500. Bloomberg Tech's headline says it all: "AI Spending Fears Threaten to Swamp Big Tech’s Strong Earnings."
The context: the 10-year Treasury yield is above 5 percent, while Gartner forecasts global AI investment of $2.7 trillion in 2026 and $3.6 trillion in 2027. Analyst Jay Goldberg of Seaport Research Partners says "nothing has changed. Investors have just decided to be afraid this week." Some Wall Street analysts, by contrast, see an unsustainable spending bubble.
My take: when the bill is measured in trillions, fear is simply the market paying attention. Wednesday is the room where the answers get handed out.
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Meanwhile at the anchor desk
Apple was the only Magnificent 7 stock up on Thursday, and it is the one name in the group the report does not tie to this spending fight. For me, the missing column is return on investment: what does all that capex earn?
Meta's filing says it signed future leases and noncancelable contracts, so that bill is already on the way. Watch the capex guidance from Alphabet and Microsoft on Wednesday before pricing anything.
