Nasdaq 100 slides 2.6% as AI spending fuels bubble fears

The spending behind the selloff

Amazon shares fell about 2% early Friday, despite the company reporting continued growth in its cloud division in its third-quarter results. Investors were also looking at a different figure: Amazon’s planned capital expenditure for 2026 has risen to $220 billion, a significant share of it tied to AI.

The pressure had already shown up in Alphabet’s stock. Shares of Google’s parent company plunged more than 12.6% on Thursday, its worst trading day in the company’s history and its second-largest one-day decline in market value. Alphabet lost more than $500 billion in market capitalization.

A bet with economy-wide stakes

Trillions of dollars have flowed into a small group of leading companies, while turning AI into commercially viable products remains difficult. Investors are also weighing whether the prevailing strategy—building enormous, energy-intensive data centers to meet demand—can hold up against smaller, more efficient models that cost substantially less to use.

The race to invest is not over, but the case for spending at this scale depends on future revenue and growth materializing. Rohit Chopra, a former federal consumer-protection official, told Politico that many market participants believe they have no choice but to invest: the spending has to pay off. If expected returns fail to arrive, the consequences could reach beyond the companies making the bets.

I think the most revealing tension is between the certainty of the spending and the uncertainty of the product economics. A $220 billion capital plan is concrete; the revenue needed to justify it is not. What I’d want to know is how much of this infrastructure can earn a return if demand shifts toward cheaper, more efficient models.