Google Lost US$480 Billion in One Day for Spending Too Much on AI. Amazon Is Next. What Big Tech’s Results Say About the Nasdaq, and Your Tech Stocks

On Thursday Alphabet, the company that owns Google, had its worst day on the stock market since it listed in 2004. Its shares fell 12.6% and about US$480 billion of value disappeared, roughly the value of every company listed on Bursa Malaysia combined. The strange part: Google’s business grew 25%. Its cloud division doubled. The company is not in trouble. It is spending too much money, too fast, on artificial intelligence, and on Thursday investors decided they would no longer pay for that on trust.

Then, after the close, Amazon reported and its shares fell 7% for the same reason. By Friday morning in Asia the Nasdaq-100 futures were down 2%, Korea’s Kospi was down about 5%, and the question every tech investor in Malaysia is asking is whether this is a wobble or the beginning of the end of the AI boom. This article walks through what the four biggest spenders actually reported, why the market punished some and not others, and what it means for the Nasdaq and for Bursa’s chip stocks.

📌 Key points

• Four companies reported in nine days: Meta, Alphabet, Microsoft and Amazon. All four grew revenue by 12% to 26%. All four are spending record sums on AI data centres.
• The market sorted them by one test: is the spending producing cash? Microsoft, whose Azure cloud grew 48% while it still generated cash, was rewarded. Alphabet and Amazon, whose free cash flow turned negative, were punished.
• Together the four plan to spend well over US$600 billion a year on capital expenditure, roughly four times Malaysia’s GDP. Three of them are now spending more than they bring in.
• The Nasdaq Composite fell 1.4% on Thursday and futures pointed to a further 2% fall on Friday. The chip index is 21% below its June record. A broader sell-off hit Korea and Japan.
• For Malaysia: Bursa’s technology index is up about 30% this year on the same AI story, trading at 52 times earnings. When the Nasdaq questions AI spending, Penang’s chip stocks hear it.

The scorecard

Company (quarter)	Revenue, growth	Cloud / AI unit	Capex this quarter	Free cash flow	Share reaction
Meta (21 Oct)	US$64.6bn, +26%	Ads, AI-driven	US$34.9bn	about −US$2.1bn	−7% next day
Alphabet (28 Oct)	US$127.6bn, +25%	Cloud +103% to US$30.7bn	US$51.4bn	−US$9.1bn	−12.6%
Microsoft (28 Oct)	US$92.3bn, +19%	Azure +48%	US$45.2bn	positive	held up
Amazon (29 Oct)	US$201.9bn, +12%	AWS +39% to US$46bn	US$75.9bn	−US$42.4bn (12 months)	−7% premarket

Free cash flow is the money left after a company pays for its operations and its investments. For most of the last decade these four were the biggest cash machines on earth. This quarter three of them spent more than they made.

Alphabet: the best quarter and the worst day

Google’s numbers were, on their face, superb. Revenue grew 25%, the fastest in years. Google Cloud more than doubled to US$30.7 billion, helped by selling its own AI chips, and it is sitting on US$561 billion of contracted future work. Search, the old cash cow, grew 12%, which is slower than before and the first hint of trouble.

The problem was the bill. Alphabet spent US$51.4 billion on capital expenditure in three months, told investors it would spend US$195 to 205 billion this year, and said 2027 would be “significantly” higher. For the first time in memory its free cash flow went negative, by US$9.1 billion, and earnings per share came in at US$2.12 against the US$3.02 analysts expected. The stock fell 12.6%, erasing roughly US$480 billion. Investors were not saying Google is failing. They were saying they can no longer see when the spending stops.

Microsoft: same spending, opposite reaction

Microsoft spent almost as much, US$45.2 billion, in the same quarter. Its shares held up. The difference is that Azure, its cloud, grew 48% against the 44% to 45% the company had guided, it forecast 49% to 50% next quarter, and the company still generated cash while doing it. Microsoft was also the only one of the four whose capex came in below what Wall Street feared. The lesson the market taught on Thursday was not “stop spending”. It was “show me the revenue from the spending, now”.

Amazon: the fastest cloud growth in five years was not enough

Amazon’s cloud, AWS, grew 39%, its fastest pace in about five years, with a US$578 billion backlog. Chief executive Andy Jassy said: “Even at $220 billion, we will not have enough capacity to meet demand.” That is the size of Amazon’s capital spending plan for this year, the largest of any company in history.

Investors looked past it. Total revenue missed, earnings missed, the online retail business grew only 2%, and the holiday-quarter forecast fell short of expectations. Free cash flow over the last 12 months is minus US$42.4 billion. The stock fell 7% in pre-market trading. Intel, reporting the same evening, guided its next quarter well below forecasts and lost nearly a quarter of its value, which told the market that the demand problem extends beyond AI into ordinary computers.

Why the Nasdaq cares so much

Five companies, Nvidia, Microsoft, Apple, Alphabet and Amazon, make up about a third of the Nasdaq-100. When Alphabet alone loses US$480 billion the index cannot ignore it, and on Thursday the Nasdaq Composite fell 1.4% to 26,184 even though more stocks rose than fell on the New York exchange. That detail matters: the broad market was fine, the AI leaders were not.

The second-round effect is on the chipmakers. Every dollar of that US$600 billion-plus capex is a customer order for Nvidia, AMD, Broadcom, Micron and the Asian supply chain behind them. If investors begin to doubt the spending, chip stocks fall first, and they did: the semiconductor index is now 21% below its June record, and on Friday the sell-off spread to Korea and Japan, where Samsung and SK Hynix are the memory suppliers to every one of these data centres.

Behind it all sits an unfriendly backdrop. The Fed held rates at 3.75% to 4.00% on Wednesday with two members voting to hike, the market prices an 82% chance of a December increase, and the 10-year Treasury yields about 5%. Expensive growth stocks are valued on profits far in the future; higher yields make those future profits worth less today. In 2021 these companies could burn cash because money was free. At 5% it is not.

Is this the AI bubble bursting?

Not yet, on the evidence. A bubble bursts when demand disappears. This week’s reports show the opposite: Google Cloud doubled, Azure accelerated, AWS posted its best growth in five years, and the three cloud providers between them hold over US$1.4 trillion of signed future contracts. What changed is the price investors will pay for that growth. The market has moved from “spend whatever it takes” to “prove it pays”, and it will apply that test every quarter from now on.

The risk is on the supply side. The spending plans assume demand keeps growing at this pace for years. If it slows, as Amazon’s retail business and Intel’s guidance hint the wider economy might, the data centres still get built and the cash is still gone. That is why the same number, US$220 billion, was a boast from Jassy and a warning to his shareholders.

What it means for a Malaysian investor

• Bursa’s chip stocks are priced on the Nasdaq’s mood. The Bursa Malaysia Technology index is up about 30% this year and trades near 52 times earnings. Companies like MPI, ViTrox, Inari and Unisem sell to the same supply chain that this capex funds. They rose on the AI story and they follow it down: MPI fell 64 sen on Thursday and was Friday’s biggest loser in the first minutes, down another 60 sen to RM40.90, with UWC and Pentamaster behind it, while the KLCI itself barely moved. Rakuten Trade’s Thong Pak Leng put the day’s mood down to Alphabet’s results renewing “concerns about heavy AI capital spending”.
• Watch the data-centre pipeline. Malaysia’s 27 approved data-centre projects are, in part, this capex landing in Johor and Cyberjaya. The spending has not been cut, only questioned. A real cut would show up in cancelled or delayed projects here first.
• The ringgit and the Fed matter more than Google. For a KLCI investor, the 5% Treasury yield and December’s possible hike move the ringgit and foreign flows more than any single earnings report. Friday’s risk-off pushed yields and the dollar lower; that is the mechanism to watch.
• Separate the index from the names. The Nasdaq fell 1.4% while most stocks rose. If you trade the index, you are trading five companies’ AI budgets. If you own a diversified fund, Thursday barely touched you.
• For traders. Earnings season is a calendar of known events. Alphabet, Amazon and Intel each moved 7% to 25% on their numbers. Nobody can predict the direction; everybody can predict the date, and size positions for it.

FAQ

Why did Alphabet’s stock fall 12% if revenue grew 25%?

Because its capital spending reached US$51.4 billion in one quarter and free cash flow turned negative, while earnings per share missed expectations. Investors decided the AI spending has no visible end and repriced the stock for that risk.

Why did Microsoft do better than Alphabet and Amazon?

Microsoft’s Azure cloud grew 48%, ahead of its own forecast, and the company still generated positive free cash flow. Its capex of US$45.2 billion was below what analysts feared. The market rewarded spending that already shows up as revenue.

How much are Big Tech companies spending on AI?

Alphabet plans US$195 to 205 billion this year, Amazon about US$220 billion, Meta US$135 to 145 billion, and Microsoft is running at a similar pace. Combined, well over US$600 billion a year, mostly on data centres and chips.

Is the Nasdaq falling because of AI?

On 29 and 30 October 2026, yes. Alphabet’s 12.6% fall and Amazon’s 7% drop after results drove the Nasdaq Composite down 1.4% on Thursday and the Nasdaq-100 futures down 2% on Friday, with chip stocks leading.

How does this affect Malaysian tech stocks?

Bursa’s technology index has risen about 30% in 2026 on the same AI-spending story and trades at a high valuation. Penang’s chip packagers and testers supply the AI data-centre chain, so doubts about US capex tend to hit them within a session.

Summary

Meta, Alphabet, Microsoft and Amazon all grew strongly and all reported record AI spending this week. The market separated them by one question: is the spending already producing cash? Microsoft passed and held its value. Alphabet, with negative free cash flow and a US$200 billion capex plan, lost US$480 billion in a day, and Amazon, with a US$220 billion plan and a revenue miss, fell 7% after hours. The Nasdaq fell 1.4% and futures pointed to a further 2%, with chip stocks and Asian suppliers hit hardest. The demand for AI is not in doubt; the price investors will pay for it is. For Malaysia, that question lands directly on Bursa’s technology index and Johor’s data-centre pipeline.

Disclaimer

This article is for education only and is not investment advice. Figures are from company reports and market data as of 5pm Malaysian time on 30 October 2026, before the US market open; share prices will have moved. Do your own research or consult a licensed adviser before investing.

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