Tech giants are grappling with surging expenses tied to artificial intelligence expansion, leading Alphabet and Meta to burn through cash while Microsoft tapped bond markets for $25 billion. Broadening consumer weakness prompted Amazon to issue a soft holiday forecast that pushed its shares down 7% after hours. Meanwhile, manufacturing challenges and hardware headwinds are intensifying, as an Israel plant explosion cost Intel $600 million and weighed on PC partners HP and Dell.
Key points
Heavy artificial intelligence infrastructure investments are depleting liquidity and forc…: Heavy artificial intelligence infrastructure investments are depleting liquidity and forcing top-tier technology firms to rely on debt financing.
Manufacturing disruptions and weak consumer spending are squeezing hardware and personal…: Manufacturing disruptions and weak consumer spending are squeezing hardware and personal computer manufacturers across the supply chain.
The semiconductor sector is undergoing a sharp correction, falling 21% below its record p…: The semiconductor sector is undergoing a sharp correction, falling 21% below its record peak set in June.
Sources checked by our analysis pipeline: 1
Surging data-center spending, as highlighted in Amazon's massive cash burn, has turned once debt-light tech giants into major borrowers, while price hikes are squeezing global demand for devices like smartphones and PCs.
Amazon forecast holiday-quarter sales below Wall Street expectations, a potential sign of growing pressure on consumers as inflation picks up, which also hit Intel's PC business, as a memory chip shortage has driven up its costs.
The AI spending spree is also eating into Big Tech's once-enviable cash flows. Alphabet and Meta both burned cash in the September quarter, while Microsoft , the only exception, joined their borrowing binge with a $25 billion debt sale on Thursday.
The tech giants have deep pockets to sustain their spending, but investors have grown increasingly wary of smaller AI cloud firms borrowing heavily to deliver on enormous order backlogs.
Amazon's 7% after-hours slide was accompanied by losses of 5.8% to 6.7% in AI cloud stocks CoreWeave, Nebius and Iren. Alphabet, which closed regular trading down nearly 13%, fell another 1.5% after-hours.
The semiconductor index also sold off post-close after Intel blamed…
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