Big Tech is spending more than ever on AI — why is the Nasdaq 100 falling?

Big Tech is spending record amounts on artificial intelligence, cloud infrastructure and data centres. Yet the Nasdaq 100 has fallen roughly 10% from its October high, pushing the index into correction territory even as many of its largest companies continue reporting strong revenue growth.

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The contradiction is becoming one of the biggest questions facing technology traders.

Amazon expects around $220 billion of capital expenditure this year. Alphabet has guided to $195–205 billion, Meta expects $135–145 billion and Microsoft is tracking towards roughly $170 billion of calendar-year spending. Together, those four companies alone are committing more than $700 billion to infrastructure as they compete for chips, computing capacity and AI customers.

Demand has not disappeared. Cloud revenue is still growing strongly and AI workloads continue to expand. The problem is that investors now want evidence that those enormous bills will translate into enough profit and cash flow to justify them.

For NAS100 traders, the debate has shifted from “will AI grow?” to “will AI grow profitably enough?”

The latest Big Tech results show why NAS100 has become more difficult to trade.

Amazon produced one of its strongest operating quarters yet. AWS revenue rose 39% to $46 billion and operating income climbed sharply, but trailing 12-month free cash flow swung to a $42.4 billion outflow as investment in AI infrastructure accelerated.

Alphabet is seeing a similar trade-off. Google Cloud is growing strongly and the company says AI is driving faster Search activity and tens of billions of dollars in cloud revenue, but management also expects technical infrastructure spending to put further pressure on free cash flow.

Meta has narrowed its 2026 capex outlook to $135–145 billion as it builds more computing capacity, while Microsoft spent $45.2 billion in its latest quarter alone and expects spending to rise further.

Those figures explain why simply beating revenue or earnings forecasts is no longer always enough to support the shares.

Investors are increasingly comparing the growth delivered today with the amount of capital required to produce tomorrow’s growth.

Microsoft provides a useful contrast because it is still managing to combine aggressive investment with strong cash generation. Quarterly revenue rose 19% to $92.3 billion, Azure revenue increased 48% and operating cash flow reached $58 billion. Even after $39.4 billion of cash spending on property and equipment, Microsoft remained free-cash-flow positive.

Microsoft’s cloud business is growing fast enough to give investors a clearer link between infrastructure spending and revenue. The company also continues to generate enough cash internally to fund much of that expansion.

The lesson for NAS100 traders is not that Microsoft is immune from a broader technology sell-off. It is that the market may become increasingly selective inside the index.

Companies showing strong AI revenue, margins and cash flow can be treated differently from those asking investors to accept several years of heavy spending before the payoff becomes clear.

Meta and Amazon demonstrate the other side of the trade. Both have strong core businesses and rapidly growing AI demand, but their spending has become large enough to change how investors assess the shares.

Meta’s infrastructure program is expanding while the company is also investing in AI models, advertising tools and new products. Its core advertising engine remains highly profitable, but investors are increasingly focused on whether that profit can keep pace with infrastructure costs.

Amazon’s situation is similar. AWS is growing at its fastest pace in years, but the company still expects around $220 billion of cash capex for 2026. Free cash flow has moved sharply negative as purchases of property and equipment accelerated.

Neither example means the AI investment is failing.

The issue is that the market is no longer willing to treat higher spending as automatically bullish. A company now needs to show both strong demand and a credible path towards earning attractive returns on the infrastructure being built. That is a much tougher standard than simply reporting another quarter of revenue growth.

Nvidia remains one of the clearest beneficiaries of the AI infrastructure cycle. Every new data centre built by Meta, Microsoft, Amazon or Alphabet creates demand for accelerators, networking equipment and memory. Huge hyperscaler budgets have therefore supported extraordinary growth across the semiconductor supply chain.

But the recent NAS100 weakness shows the connection can work in both directions.

If investors start pressuring Big Tech to slow capex, demand forecasts for the chip industry can also be reassessed. Nvidia does not need cloud companies to become unprofitable for that to matter. Even a slower rate of spending growth could affect expectations after years of exceptional expansion.

The same applies across other semiconductor names.

The AI hardware trade is therefore increasingly tied to whether hyperscalers can prove their infrastructure investments are generating enough revenue to keep budgets rising.

For NAS100 traders, that makes cloud earnings, capex guidance and semiconductor demand part of the same trade rather than separate stories.

NAS100 remains up around 11% for 2026, but it is now roughly 10% below the record reached in early October. The pullback has been much larger than the decline in the broader S&P 500, showing how concentrated the recent pressure has been in technology and growth stocks.

When Microsoft, Amazon, Meta, Alphabet, Nvidia and other AI leaders rise together, NAS100 can outperform quickly. When investors start reassessing the same AI investment cycle, the weakness can spread just as fast.

Higher valuations make the reaction sharper because strong growth is already expected. A company can therefore report healthy revenue and still fall if capex rises faster than expected, margins weaken or guidance suggests the payoff from AI will take longer to arrive.

The recent correction does not necessarily mean the AI trade has ended. It shows that investors are demanding more evidence before paying higher prices for the same growth story.

• AI capex guidance: Any sign that Big Tech budgets are accelerating again could support semiconductor demand but raise fresh concerns about cash flow.

• Cloud growth: Strong Azure, AWS and Google Cloud growth would provide evidence that infrastructure investment is translating into revenue.

• Free cash flow: Investors are becoming less tolerant of companies burning cash while spending heavily on AI.

• Nvidia earnings: Strong chip demand would reinforce the infrastructure story, while weaker guidance could deepen concerns that the spending cycle is slowing.

• Big Tech margins: Rising depreciation, power and data-centre costs could pressure profits even when revenue remains strong.

• NAS100 technical levels: After a roughly 10% correction, traders will be watching whether the index stabilises or breaks further below its recent range.

Trading NAS100 with Mitrade

The current NAS100 setup is unusually two-sided. AI demand remains strong, cloud businesses are expanding and major technology companies are still investing aggressively. At the same time, valuations are high and investors are becoming more sensitive to capex, free cash flow and the timing of future returns.

Eligible Australian clients can use Mitrade CFDs to trade NAS100 without owning the underlying index constituents. Traders can take a long position if they expect technology shares to recover or a short position if they expect the correction to deepen.

That flexibility can be particularly relevant when the same AI spending cycle creates both bullish and bearish catalysts. Stronger cloud growth or improving cash flow could support NAS100, while higher capex, weaker margins or disappointing semiconductor guidance could add pressure.

Stop-loss and take-profit orders can help define exit levels, while pending orders allow positions to open only when selected prices are reached.

Mitrade is regulated in Australia by ASIC. Index CFDs are leveraged products, so both potential gains and losses can be magnified.

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