Tech stocks suffered heavy losses as investors reacted poorly to September quarter financial results. Amazon missed third-quarter estimates on both the top and bottom lines while recording negative free cash flow for the second straight quarter, with deficits widening compared to the previous period. Despite the cash squeeze and weak performance, the retail giant stood by its projected $220 billion capital expenditure plan for 2026.
Key points
Investors are growing increasingly impatient with mega-cap tech companies committing mass…: Investors are growing increasingly impatient with mega-cap tech companies committing massive capital expenditures to artificial intelligence without near-term financial payoffs.
Wall Street is punishing tech firms with negative free cash flow, as seen in earlier reco…: Wall Street is punishing tech firms with negative free cash flow, as seen in earlier record drops for Alphabet alongside Amazon's decline.
Microsoft bucked the wider sector downtrend by generating positive cash flow for its Sept…: Microsoft bucked the wider sector downtrend by generating positive cash flow for its September quarter.
Sources checked by our analysis pipeline: 1
Amazon and Intel shares were down in premarket trading on Friday after they reported September quarter numbers that disappointed investors, dragging Nasdaq futures down 2% and capping off a week of rough tech earnings.
Amazon shares were down 7% in premarket trading, while Intel was down 25%.
Amazon reported a third-quarter miss on the top and bottom line while maintaining its capital expenditure forecast for 2026 of $220 billion this year. Amazon also reported negative free cash flow for the second consecutive quarter, much larger than the previous period.
Investors are nervous about the massive AI spending from the tech giants and whether that will pay off.
On Thursday, Alphabet shares closed 13% lower, its worst single-day drop in history after it too reported ballooning negative free cash flow.
Microsoft shares rose after it remained cash flow positive in the September quarter.
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Wall Street faces a packed agenda of political and macroeconomic catalysts following sharp drops in major tech names spooked by costly artificial intelligence infrastructure. Upcoming congressional votes could usher in stricter regulatory oversight for financial institutions, cryptocurrency platforms, and tech developers. Traders are closely evaluating whether strong consumer spending and employment can offset deep volatility triggered by massive corporate cash burn.
Shares of Vivendi are experiencing a surge in trading today. Details regarding the specific drivers behind the sudden rise in the company's share price remain unconfirmed.