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AI spenders slide while suppliers gain as cash pressure mounts
The mega-cap AI spenders fell an average 9% this week, while a basket of suppliers rose about 11%, underscoring a cash and capex mismatch.
Wall Street’s biggest artificial intelligence spenders stumbled this week as investors weighed who ultimately funds the build-out. Yahoo Finance reports that Alphabet, Microsoft, Amazon, Meta, and Tesla fell an average of 9%, while shares tied to AI suppliers, including memory makers, server builders, and data center landlords, rose an average of 11%.
Nvidia was among the exceptions, gaining 2% and adding roughly $100 billion in market value, about what Microsoft and Apple lost combined, according to Yahoo Finance. The same coverage highlighted that Alphabet “beat on almost every line,” with revenue up 24% and cloud revenue up 82%, yet its stock still dropped 8% and shed about $330 billion in market value.
The pivot for Alphabet was cash flow. Capital spending doubled to nearly $45 billion and outpaced cash generated by the business, pushing free cash flow below zero for the first time as a public company, Yahoo Finance reports, and management declined to say how far spending will go in 2027 after raising its plans again.
Tesla’s market reaction followed a different direction, with Yahoo Finance citing revenue that beat but earnings that missed and an operating margin that fell to 1.4% from 4.1% a year ago. Tesla shares fell 18% and lost about $250 billion, with the story noting suppliers fared better, including Supermicro jumping 25% after disclosing more than $60 billion in new orders in a quarter, while Digital Realty rose nearly 15% on a record leasing backlog.
The impact stayed contained outside the biggest names. Yahoo Finance said about $880 billion left the Magnificent Seven, while the rest of the S&P 500 gained about $165 billion, leaving the index close to flat for the week.
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