The Nasdaq Composite fell more than 1% on Tuesday as investors backed away from AI chip stocks before earnings from four of Wall Street’s largest companies. Separately, Alphabet’s shares slid 7% last week after it raised its 2026 capital spending forecast, and Amazon, Meta and Microsoft fell as well. Those three now face the same scrutiny over infrastructure investments when they report this week.
The Nasdaq Composite lost 290.20 points, or 1.16%, to 24,641.89 at 9:49 a.m. ET on Tuesday, as concerns about hefty corporate spending on AI and rising Chinese competition spread through chip stocks. Amazon, Meta, Apple and Microsoft report later this week, and investors want to see whether investments worth over several hundred billion dollars are yielding returns.
Chip stocks lead the decline
Micron slid 6.4%, while Nvidia dropped 1.2% and Intel shed 5%. U.S.-listed shares of Taiwan’s TSMC and South Korea’s SK Hynix fell 2.7% and 6%, respectively. The Philadelphia SE Semiconductor Index was down 4% and has fallen over 20% from its all-time high hit in June.
Global markets have become increasingly volatile this month as investors scrutinize the need for more corporate spending on AI infrastructure. Robert Pavlik, senior portfolio manager at Dakota Wealth, said the market is extremely concerned about the level of hyperscaler spending: “These huge dollar amounts feel irresponsible at this point.”
Alphabet’s capex forecast set the tone
Shares of Google’s parent slid 7% on Thursday after Alphabet lifted the top end of its 2026 capital expenditure forecast to $205 billion, and Amazon, Meta and Microsoft fell alongside it. Mark Mahaney, head of internet research at Evercore ISI, wrote Wednesday that the increase raises the odds Amazon and Microsoft do the same.
Microsoft and Meta report after the close on Wednesday, and Amazon follows on Thursday. In April, Microsoft projected $190 billion worth of capex and finance leases for the year, including $25 billion from higher component prices, as AI chip demand eats up memory supply. Following Alphabet’s report, the consensus for Amazon crept up almost $2 billion to $207.4 billion, according to Visible Alpha.
Meanwhile, Amazon’s long-term debt shot up 81% to $119 billion from Dec. 31 to March 31, while Alphabet’s rose 111% to $98 billion during the first six months of 2026.
The Fed decision lands mid-week
The Federal Reserve is due to announce its interest-rate decision on Wednesday, and traders see a 37% chance of a rate hike this week, according to LSEG data. They also expect borrowing costs to rise by at least 25 basis points by year-end. Higher rates could further pressure AI companies that are becoming more dependent on debt financing.
Sources: CNBC, Reuters via Investing.com
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