Tech stocks lose $1 trillion in a day as AI spending surges
Tech stocks just lost over $1 trillion in a single day.
The short version
- Alphabet fell 12.6 percent after its core search revenue missed estimates.
- Software giant ServiceNow dropped 27 percent on slowing revenue growth.
- Big Tech spending on artificial intelligence is leaving investors worried.
Why it matters to you. For business owners watching the markets, this massive Tech correction signals a nervous reality check on how quickly artificial intelligence investments will actually pay off.
Wall Street is facing a massive sell-off as technology stocks lost more than $1 trillion in value in a brutal two-day market rout. Alphabet, which owns Google, saw its stock fall 12.6 percent after reporting quarterly search revenue that missed expectations, wiping out roughly half a trillion dollars in market value.
The Google parent reported negative free cash flow of $9.1 billion, far worse than the negative $2.23 billion analysts expected, according to FactSet data. Software giant ServiceNow plummeted 27 percent on the same day following slowing revenue growth and disappointing guidance. By Friday morning, the pain spread to Amazon, Intel, and Reddit, with Intel shares tumbling roughly 25 percent before the opening bell.
Big Tech lost nearly $900 billion in market value after another sharp rise in artificial intelligence spending during the third quarter, according to Financial Times calculations. Investors are spooked because massive cash reserves are being funneled directly into artificial intelligence build-outs while returns remain scarce.
According to S&P Global Market Intelligence data, hyperscalers have raised $326 billion in stock and bonds this year to pay for infrastructure, more than triple the amount from 2025. Apollo chief economist Torsten Slok told clients that artificial intelligence has delivered zero financial payoff to corporate America outside of Tech companies.
Meanwhile, a price war is driving down token costs for services from OpenAI and Anthropic, with Ramp expense data showing prices down roughly 35 percent since the end of June.
Photo: Austin McKinley, CC BY 3.0, via Wikimedia Commons
