November 1, 2026
Amazon shares dropped 7 percent after earnings missed and heavy AI spending turned free cash flow negative, dragging down Meta and Alphabet.
What happened
Amazon's stock fell 7 percent. Meta shares slipped 2 percent and Alphabet dipped as well. The moves followed Amazon's earnings miss and an outlook showing free cash flow turning negative, driven by spending on artificial intelligence.
Why it matters
When a company as large as Amazon spends so heavily on AI that its cash flow flips negative, it raises a direct question about whether those investments will ever pay back. The selloff hit Meta and Alphabet too because they are on the same path, racing to build AI infrastructure. Investors are now repricing the risk that hyperscaler AI spending grows faster than revenue, destroying value instead of creating it.
The case against
Goldman Sachs still calls Alphabet a top AI pick despite the earnings miss, suggesting this spending ultimately builds durable competitive moats that justify the upfront cost. The market's reaction may be short term fear rather than a rational verdict on returns that will take years to materialize.
What settles it
The next quarterly capex and free cash flow figures from Amazon, Microsoft, and Alphabet.