Microsoft, Amazon, Google, and Meta are facing cash flow pressure due to AI investments, with Amazon and Alphabet shares falling sharply.
Tech giants like Microsoft, Amazon, Google, and Meta are investing trillions of dollars into the AI sector, which is putting pressure on their traditional businesses and impacting free cash flow. Meta, Amazon, and Alphabet reported negative free cash flow this quarter, with Meta at negative $2.12 billion, Amazon outflowing $42.4 billion, and Alphabet reaching $9.07 billion. Microsoft's cash generation also significantly dropped by 27% to $18.63 billion, and the company stated it would turn to the bond market to support AI infrastructure spending. Amazon and Alphabet's stock prices plummeted after their earnings reports, with Alphabet experiencing its largest single-day drop ever on Thursday, and Amazon also falling sharply after hours. Amazon expects capital expenditures to reach $220 billion this year, and analysts anticipate it will exceed $280 billion next year. Meta's stock price fell 7% after its earnings report last week, and this Monday, the company announced plans to raise $95 billion through a stock offering to support AI investments.
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