New York. Shares in US tech giants tumbled on Friday, capping a week of earnings reports that raised questions on Wall Street about whether the AI spending boom was sustainable.

Microsoft, Alphabet and Amazon all reported quarterly results this week, signaling they would continue pouring money into data centers and chips even as investors grow impatient for returns.

Together with Meta, which reported last week, the four companies are on track to spend more than $700 billion on capital investments this year — roughly the size of Argentina’s or Belgium’s entire economy — much of it on AI infrastructure, according to analyst estimates.

The companies are “all showing some pretty significant growing pains as they ... aggressively pursue the AI build-out,” Christopher Low of FHN Financial told AFP.

Low said that while the sell-off reflected company-specific developments, investors were interpreting them as signs that growth across the sector could slow.

Chipmaker Intel was the hardest hit, with its shares plunging as much as 30% after it issued a weaker-than-expected fourth-quarter revenue forecast, citing weakness in the PC market and manufacturing bottlenecks.

Intel’s PC business has been hurt by higher memory prices and supply constraints stemming from the AI build-out, as the race to develop AI infrastructure squeezes supplies of key components used in consumer electronics.

The resulting shortages have pushed up prices for laptops, gaming consoles and smartphones, threatening to weigh on consumer demand for devices that use Intel’s chips.

Amazon shares also fell after the e-commerce and cloud computing giant reported third-quarter results that missed expectations.

Low said demand for Amazon’s cloud services remained strong, prompting the company to nearly double its AI-related spending this year, while its retail business remained weak.

“That means they’re going to need more debt to finance the build-out, and investors obviously didn’t like that,” he said.

Alphabet shares plunged 12% on Thursday, marking their worst single-day decline since Google’s parent company went public in 2004.

Low said search advertising, Alphabet’s main source of revenue, had weakened in the previous quarter, with investors concerned that AI-powered search was becoming more effective at answering queries without displaying ads.

At the same time, he said, returns on Alphabet’s AI investments were “not very good.”

Steve Sosnick of Interactive Brokers said shares in the tech giants had been priced for perfection.

“When you price for perfection, anything less than perfect is going to come back and is going to bite you, and this is kind of what’s happening here,” he said.

Ives described the week as “a tale of two cities for tech investors.”

Cloud results from Microsoft, Amazon and Alphabet were strong, he said, while their spending levels were broadly in line with expectations.

But the earnings reports had exposed uncertainty over which companies and sectors would be disrupted by AI.

For Alphabet, “this is the first quarter that the negative thesis around AI crushing search has legs,” Ives wrote, referring to Google’s search advertising business, one of the most profitable businesses in history.

He said software companies were also seeing AI projects translate into revenue more slowly, but added: “This is not the time to panic and sell all the tech winners and head into the bunker.”

Ives said he expected 2027 to be the year when AI revenue begins to justify the massive investments.

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