Big tech stocks were stranded in premarket trading Monday after a harrowing week that wiped more than $1 trillion from their market capitalization.
As of 6:40 a.m. ET, oracle Increased by 1.6% microsoft It was up 0.8%. Meta fell 0.2% and amazon It was flat. alphabet down 0.5%, Nvidia It fell about 0.9% after rebounding 7.9% on Friday.
Markets grew anxious after last week’s big tech results continued to boost spending outlooks as companies doubled down on spending on AI.
Amazon, Alphabet, Microsoft, and Meta reported combined capital spending of about $120 billion in the fourth quarter alone. This figure could approach $700 billion in 2026, exceeding the gross domestic product of countries such as the United Arab Emirates, Singapore, and Israel.
Jim Reid, head of global macro research at Deutsche Bank, wrote in a note on Monday that last week was the worst week for the Magnificent 7 stocks since April, when U.S. tariffs sent the market into crisis and stocks fell 4.66%.
Reed said there were signs of recovery after the market closed last week, with Magnificent 7 shares up 0.45% on Friday, even as Amazon fell 5.55%.
Justin Post, a research analyst at Bank of America Securities, said in a note Monday that cloud companies’ margin expansion comes with “potential stock price volatility” amid macro headwinds.
“However, management appears confident in its ability to forecast demand, and that capability will be fully utilized in 2026,” he added.
David Lefkowitz, chief investment officer for U.S. equities at UBS Financial Services, said Friday that the market reacted negatively to Amazon and Alphabet’s capital spending outlook being “well ahead” of consensus expectations, adding that this “overshadowed both companies’ better-than-expected cloud growth.”
Nvidia CEO Jensen Huang told CNBC’s “Halftime Report” on Friday that the tech industry’s surge in capital spending on AI infrastructure is justified given the “very high” demand for computing power.
Analysts predict there is room for growth in hyperscaler capex.
“We believe hyperscaler capex estimates will continue to see upward pressure as tokens processed monthly increase sharply, GCP/AWS/Azure total cloud revenue accelerates, data center commitments expand, and data center component suppliers highlight accelerated demand,” Morgan Stanley said in a note Monday morning.
