The immediate catalyst for the sell-off was investor reaction to Amazon’s announcement that it plans to spend around $200 billion in capital expenditures in 2026, primarily on cloud and AI infrastructure. The figure significantly exceeded market expectations and prompted a sharp drop in the company’s share price. Broader market indicators, including the technology segment of the S&P 500, also declined markedly, while stocks of Microsoft, Nvidia, Meta and Google came under pressure as investors reacted to rising spending levels and uncertainty over how quickly AI investments can translate into meaningful profits.
The sell-off was not limited to infrastructure giants. Shares of software and data-services companies — traditionally seen as vulnerable to automation and the disruption of existing business models by AI tools — were also hit. Market data show that declines in companies such as RELX and Wolters Kluwer reflected growing fears that generative AI models and automation tools could undermine the current market value of analytical services and software businesses.
Oracle’s shares were among the hardest hit. The company recorded its worst eight-day losing streak in more than two decades, driven in part by investor scepticism over its strategy to pivot toward cloud and AI services while carrying significant financial burdens and debt.
The negative sentiment surrounding technology stocks suggests a gradual shift in investor focus — away from expectations of rapid AI-driven profits and toward the real costs of building and operating data infrastructure, including data centres and the GPU chips required to train large models. These concerns are closely tied to broader discussions about a potential investment bubble in AI, as demand for accelerators and computing resources continues to surge while returns on those investments remain uncertain and potentially delayed.
Some analysts and investors view the current downturn as a temporary correction following excessive optimism and inflated expectations. They argue that shares of fundamentally strong companies could rebound once markets gain clearer visibility into future AI-related revenues. In the short term, however, technology stocks remain highly sensitive to warning signals triggered by the scale and pace of capital-spending announcements across the sector.