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Tech stocks slide as AI capex jitters and crude price pressures build
Alphabet reported negative free cash flow for the first time while lifting its 2026 capex outlook, and Reuters analysis flagged that major hyperscalers could spend more on capex than they generate in free cash flow by 2027.
Cash burn concerns and higher crude prices dominated market headlines this week, with U.S. stocks falling to multi week lows on Thursday and the Nasdaq leading the decline. Yahoo Finance cited growing unease about whether the AI spending boom can sustain its pace, pointing to evidence from major tech earnings.
Alphabet, the first of the tech giants to report this quarter, posted negative free cash flow for the first time ever while increasing its 2026 capex projection by $15 billion. Tesla also signaled it is back in cash burn mode, missing analysts' profit forecasts for the second quarter and reporting negative free cash flow for the first time in more than two years as it ramps spending tied to AI and robotics infrastructure.
An analysis referenced by Yahoo Finance from Reuters suggested the four major U.S. hyperscalers, Microsoft, Alphabet, Amazon, and Meta, could collectively spend more on capex than they generate in free cash flow by 2027 if their current pace continues, using LSEG consensus estimates.
Meanwhile, Asian markets stayed volatile, with South Korea's KOSPI hitting its lowest point in almost three months on Monday and then dipping again on Friday, down more than 5%. Yahoo Finance linked the latest weakness to renewed Middle East escalation, including a Houthi announced blockade of Saudi vessels through the Bab el Mandeb Strait, a key route that had helped oil exit the Middle East after the effective closure of the Strait of Hormuz.
Latest closeWTI crude $90.47 ▼1.9%|Nasdaq Comp. 24,975.82 ▼0.6%|Kospi 7,096.89 ▲4.4%