Q3 earnings put cracks in the AI spending boom on display

The four largest US tech companies plan to spend more than $740 billion on capital projects this year, most of it on AI, and investors who once cheered that are starting to flinch. TechCrunch walks through the numbers from the latest quarter. Alphabet posted negative free cash flow of $9.1 billion, its second straight quarter in the red, with quarterly capex of $51.4 billion and guidance of up to $205 billion for the year. Amazon ran $42.4 billion negative over the trailing twelve months, a swing from $14.8 billion positive a year earlier. Meta slipped to negative free cash flow too. Microsoft was the exception, with $18.6 billion positive, though its spending came in under plan only because third-party capacity was delayed.

The market reaction was blunt. Alphabet fell 12% in a single day, its worst on record, wiping out around $500 billion in value, and the selloff spread: Nvidia dropped 4%, Broadcom more than 5%, Qualcomm 11%. Amazon fell 7% even as AWS grew 39%, and Meta dropped 10% despite ad revenue up 26%, which tells you the worry is cost, not demand. Underneath, these firms plus Oracle raised a combined $326 billion in debt this year, about triple the prior year. Blackstone reportedly warned that Anthropic might not earn an investment-grade rating after its planned IPO, which would make it lean harder on hyperscalers to fund its buildout.

Why it matters

If your company or your job depends on sustained AI infrastructure spending, this is the quarter the market started pricing in doubt. Demand for compute is still strong, so the pressure is on returns and cash flow, and that is the gauge to watch now, because a pullback in capex would ripple straight through to chipmakers, cloud capacity, and model pricing.