AI distorts the results of big tech companies

• Experts and analysts consider that investors have taken a "realistic" turn with AI
• Several tech giants record major losses on the stock market after publishing results
• Part of the market draws parallels between the state of the tech market and bubbles of the past
• The poor investor sentiment questions the valuation of the stock market debut of Claude's creator

The latest round of results from the major US tech companies has eroded market euphoria for artificial intelligence (AI). Companies on the scale of Amazon and Alphabet (Google's parent company) have made investors' knees shake because of their spending forecasts on computing infrastructure, which much of the market considers excessive. Even Microsoft, which has managed to save face with positive cash generation, has been far from the stock market exaltation that the giants associated with AI had experienced.

Approaching the acid test for the sector that will be the IPO of Anthropic, the creator of Claude, analysts and investors point to a “change in vision” on the part of capital. “When a new technology appears, everyone who invests in it is rewarded. But, when some time passes, investors begin to demand returns,” observes Xavier Brun, director of variable income at Trea AM, in conversation with Empreses.

Looking at the earnings reports of the hyperscale technology companies, the analysts consulted agree that they are not entirely negative, even if some figures have disappointed the market. Amazon, for instance, declared on Thursday night revenues close to 202 billion dollars, slightly below investor estimates, but with activity in the cloud computing segment higher than expected, near 46 billion dollars. Alphabet, in a similar vein, reported revenues close to 127.6 billion dollars, a substantial decrease compared to the 128.2 billion that analysts expected to see.

This step back in earnings, however, does not explain the stock market crash that the two companies have suffered: on Thursday, after presenting their results, the Google parent company recorded the worst day of its history on the stock exchange, with a cut close to 13% that wiped out 500 billion in market capitalization in one go. The giant founded by Jeff Bezos, for its part, lost more than 1.41% on Friday compared to the day before reporting results. However, the worst crash in the technology world was recorded by Intel, which sank more than 28% in one of the worst days of its stock market history.

In the eyes of the market, the game is no longer played on revenue and profits. The key figure, as commented by the investors consulted, is cash generation, that is, the actual money a company generates from its activity after subtracting expenses. “In the last earnings season, a change in demands was already seen, but in this one, it has been much more noticeable: they are demanding an acceleration in cash generation,” comments Javier Cabrera, an analyst at XTB.

Both Alphabet and Amazon have shown, with their quarterly accounts, that not only do they not generate cash, but they also burn through it, and at a more than high rate. Google's parent company reported a negative free cash flow of nearly 9.1 billion dollars, and Amazon recorded an accumulated deficit of more than 42 billion in the previous twelve months. Meta – the owner of Facebook, WhatsApp, and Instagram – also burned cash at a rate of more than 2.1 billion dollars last quarter. Among the technological hyperscalers, only Microsoft brought in more cash than it spent, with more than 18 billion in FCF. Despite the good signs, the company founded by Bill Gates also lost ground on the stock market, with a drop of one and a half points on Friday.

In the opinion of Jaume Puig, general director of GVC Gaesco, the holes in the cash flow of a good part of the hyperscalers demonstrate that “they are betting everything on one card”: investments in infrastructure for AI. In a recent analysis, Morgan Stanley calculated that the total investment in data centers could approach three trillion dollars accumulated by the year 2028. And the big tech companies have not only not lowered these expectations, but they have also accelerated them.

Alphabet is maintaining its pace of capital expenditure for 2026, with a forecast of around 200 billion dollars. Amazon, for its part, invested more than 77 billion during the quarter, and its CEO, Andy Jassy, assured investors that he expects to “spend significantly more” next year. Only Microsoft has slightly lowered expectations and calculates that it will spend about 170 billion throughout 2026, about 5 billion below previous forecasts; although they attribute the cut to delays in operations, and not to a change in investment strategy.

According to Cabrera, the competition between the giants makes it very difficult to see conservative turns in data center spending: “They are in a race that will condition their business model, and they cannot stop no matter how much the investor asks for it”.

Bubble memories

For Brun, investor reactions to these expenses, coupled with the cyclical inability to generate cash, demonstrate that "the profitability" of the big tech companies' bets on AI is "being called into question." Puig points out, however, that the situation does not mean a blanket dismissal of the artificial intelligence project. "The future of AI is not being questioned; but it is that the returns of the first years might be insufficient or lower than expected," he argues. In this sense, he observes that capital has "gone into realistic mode" and can choose to gain positions in companies that are less focused on investment, but with more immediate returns. "The investor is opting for the benefits they have on the table," the expert continues.

Brun expresses himself in a similar vein: "Even if the benefits of AI are not being questioned, how long will it take to generate those benefits? With the dot-coms, it took fifteen years," he recalls. The comparison with the internet bubble of the late 90s has become a common prism for studying the artificial intelligence boom, even for major economic institutions. In a recent blog post by the European Central Bank, several of the entity's economists questioned whether the behavior of investors with tech companies is "a rational enthusiasm or the next bubble."

In fact, Puig parallels the situation with other major investment bursts of the past, such as the housing bubble prior to 2008: many new data centers are being built, but it remains to be seen when the demand for computing will be enough to justify the investments. "When supply grows a lot at a given moment, just let the demand arrive five years later, and a significant disaster is generated," observes the general director of GVC Gaesco.

Anthropic, the touchstone

The bad blood among North American tech investors could not come at a worse time for one of the key pieces of the AI machinery: Anthropic, it should be remembered, officially filed the documentation for its stock market debut last Monday, and reports from the Reuters agency indicated that the leap to the open market could come after the midterm elections in the United States, which will be held on November 3. In Puig's opinion, these new demands from investors put the laboratory directed by Dario Amodei in a bad spot: “If the general state of investors is to prefer future prospects, they are willing to pay much more”.

However, “if Anthropic were to go public today, it would find that the context is not that”, adds Puig. It should be remembered that, according to several North American media outlets, the company aspires to a total valuation on the stock market of two trillion dollars; although Reuters itself pointed out, citing investor sources, that the label could be lowered to 1.5 trillion.

Cabrera, for his part, acknowledges that “if the sentiment continues, it could harm” the creator of Claude. Nevertheless, he refers to the figures published on Monday and eases tensions with the same argument that has punished the big tech companies: cash. Anthropic revealed a treasury of more than 112 billion dollars. “The narrative that said it was a cash-burning machine is not quite so,” insists the XTB analyst, who recalls that SpaceX's accounts “raised quite a few more doubts” and, even so, it completed a record stock market debut.

Brun, however, sees a change of narrative on the horizon. For the expert, Anthropic's stock market debut will be “the turning point that will make investors question the essence” of their bets again. “Investors are buying a narrative, which we can call irrational, but this has happened more times when there are bubbles”, he reasons. And he recalls the old investor maxim: “The market can remain irrational much longer than you can remain solvent”