Big Tech Stocks Steady After Heavy Sell-Off

Big Tech shares were mostly flat in early trading on Monday after a rough week that erased more than $1 trillion in market value across the sector.

Pre-market Trading Shows Little Movement

By 6:40 a.m. ET, Oracle was up 1.6 percent, and Microsoft rose 0.8 percent. Meta slipped 0.2 percent, while Amazon was little changed. Alphabet fell 0.5 percent, and Nvidia dropped about 0.9 percent, following a strong rebound on Friday.

AI Spending Raises Market Nerves

Investor caution grew after major tech firms outlined massive spending plans tied to artificial intelligence. These forecasts raised concerns about rising costs even as companies push harder into AI infrastructure.

Capital Spending Reaches New Heights

Amazon, Alphabet, Microsoft, and Meta reported combined capital spending of about $120 billion in the fourth quarter alone. Analysts expect total spending by these companies to climb close to $700 billion in 2026, a figure larger than the economies of several countries.

Worst Week in Months for Mega Cap Tech

Jim Reid, head of global macro research at Deutsche Bank, said last week marked the weakest performance for the so-called Magnificent Seven stocks since April. At that time, markets were shaken by concerns about US tariffs.

Late Week Bounce Offers Some Relief

Despite the sharp losses, signs of stabilization emerged at the end of last week. The Magnificent Seven group gained 0.45 percent on Friday, even as Amazon shares dropped more than 5 percent.

Cloud Growth Brings Both Opportunity and Risk

Justin Post, an analyst at Bank of America Securities, said improving cloud margins could support long-term growth but warned that stock prices may remain volatile due to broader economic pressures.

He added that company leaders appear confident that demand will remain strong and that capacity will be fully used by 2026.

Capex Guidance Weighs on Sentiment

Markets reacted poorly to capital spending guidance from Amazon and Alphabet, which came in well above expectations, as investors grew wary of escalating costs tied to the Amazon AI war. UBS said this concern outweighed stronger-than-expected cloud growth reported by both companies.

NVIDIA Defends AI Investment Boom

NVIDIA chief executive Jensen Huang said the surge in AI-related spending is justified, citing extremely strong demand for computing power.

Analysts See More Spending Ahead

Morgan Stanley said rising data usage, expanding cloud revenues, and increasing demand for data center equipment suggest capital spending by hyperscalers will continue to rise.