Tech giants Alphabet, Amazon and Intel see shares tumble as AI spending raises cash-flow concerns

Shares of Alphabet, Amazon and Intel dropped sharply on Thursday after the companies reported higher spending on artificial-intelligence infrastructure and weaker cash-flow metrics. Alphabet’s stock fell more than 13%, its largest single-day decline, as the September quarter posted a negative free cash flow of $9.1 billion and capital expenditure of $51.4 billion, double the level a year earlier. The company also missed Wall Street earnings expectations, citing slower growth in its core search-advertising business.

Amazon’s shares slipped over 4% following a third-quarter earnings report that showed earnings of $1.89 per share, below the $1.96 consensus, and revenue of $201.94 billion, slightly under estimates. The e-commerce and cloud provider recorded negative free cash flow for the second consecutive quarter, with a 12-month outflow of $42.4 billion. CEO Andy Jassy said the firm expects to "spend meaningfully more in 2027" while maintaining a clear view of attractive financial returns.

Intel’s stock fell more than 23% in extended trading after the chipmaker issued a weak fourth-quarter outlook, citing continued weakness in the global PC market. Revenue from its client computing and physical AI segment declined 5% year-on-year to $8.1 billion, though data-centre and AI revenue rose 78% to $7.3 billion. Finance chief David Zinsner warned that the PC slowdown is likely to continue into the first half of next year.

Analysts note that six large hyperscalers plan to invest $7.7 trillion in AI infrastructure through 2030, raising questions about whether the spending can generate returns comparable to the capital deployed. UBS Global Research projects a potential decline of 20-25 percentage points in return on invested capital for these firms as AI becomes a larger share of their operations.