Wall Street on edge after $1.4 trillion wipeout

November 2, 2026 — 8:59am

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For nearly four years, Wall Street has been happy to underwrite the boom in artificial intelligence spending, providing blank cheques without asking too many hard questions. Now, it seems, investors have become uneasy about the massive spending spree they have helped ignite.

Late last week, as a collective, the biggest tech companies lost almost $US1 trillion ($1.4 trillion) of market value, headed by a 13 per cent, or $US500 billion, plunge in the value of Google’s parent, Alphabet.

Shares in the four big hyperscalers – Alphabet, Microsoft, Meta and Amazon – all fell heavily after issuing third-quarter results that showed capital expenditures soaring and, for all but Microsoft, revenue growth from their core business weakening.

Concerns about the rate of spending by the hyperscalers – as a group, probably the most profitable and valuable companies in history – have risen even as their investments in AI have accelerated.

In the latest quarter they invested more than $US200 billion, compared with $US113 billion in the same quarter of last year. They expect to spend at least $US230 billion in the December quarter.

Increasingly, that spending is outstripping even the vast cash flows they generate from their legacy businesses.

The $315b debt binge that’s driving up the cost of borrowing

Of the four biggest hyperscalers, only Microsoft is generating positive free cash flows. It had $US18.6 billion of free cash flow in the quarter, whereas Alphabet (minus $US9.1 billion), Amazon (minus $U33.5 billion) and Meta (minus $US2.1 billion) racked up nearly $US45 billion of net cash outflows between them. In the same quarter last year they had positive net cashflows of more than $US36 billion.

They’re all reporting record levels of capex and have foreshadowed higher levels of spending in the fourth quarter and into next year. They’ll spend around $US750 billion........

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