Big Tech's $600 Billion AI Spending Spree Spooks Wall Street Investors

A planned $600 billion artificial intelligence spending spree by America's largest technology companies is sending shockwaves through Wall Street, as investors grapple with questions about profitability and the future of the software industry.

Amazon sent the clearest signal yet of Big Tech's AI ambitions, announcing a staggering $200 billion capital expenditure outlay for 2026. The announcement triggered a 7% slide in Amazon shares Friday, even as the broader market showed resilience.

Alphabet, Google's parent company, compounded investor anxiety by forecasting that its capital spending could double this year as it races to maintain its position in the AI arms race. Meta Platforms also signaled continued heavy investment, contributing to a broader sector decline.

"The market's viewpoint is that the AI build-out trade got too pricey," said Andrew Wells, chief investment officer at SanJac Alpha in Houston. "It's not that the trade is over, but it got too expensive pulling forward all these potential future revenues without really pricing in the risk."

The spending surge has created a stark divide in the technology sector. While Nvidia rose 7% on expectations of continued demand for its AI chips, and Microsoft gained 1%, traditional software companies face what some analysts call an existential threat from powerful new AI models that could automate or replace their core products.

Data analytics firms have been particularly hard hit. Thomson Reuters, a mainstay of the financial information industry, has seen its stock come under sustained pressure as investors worry that AI tools could disrupt its business model. For those tracking financial markets and investment strategies, the sector rotation presents both risks and opportunities.

Nvidia CEO Jensen Huang offered a bullish counter-narrative, attributing the spending uptick to "sky-high" demand. Speaking on CNBC's "Halftime Report," he called the increase appropriate and sustainable, suggesting the infrastructure build-out is only beginning.

Industry observers and technology analysts note that the current spending wave represents a fundamental reallocation of corporate resources toward AI infrastructure, potentially reshaping the competitive landscape for years to come.