AI Spending Fears Push Amazon and Microsoft Into Bear Markets

2026-02-15 companies

New York, Sunday, 15 February 2026.
Microsoft’s capital expenditure surged 66% to $37.5 billion, driving investor anxiety that pushed both it and Amazon into official bear markets as the race for AI infrastructure intensifies.

Tech Giants Stumble

The technology sector has hit a significant turbulence zone, marked by a decisive shift in sentiment against the industry’s heaviest spenders. As of the market close on February 12, 2026, Amazon (AMZN) shares settled at $199.60, representing a year-to-date decline of 13.5% [1]. Microsoft (MSFT) has fared even worse, closing at $401.84, a drop of 16.9% since the start of the year [1]. Both companies have officially breached the bear market threshold, defined as a decline of more than 20% from their recent peaks [1][2]. The divergence in performance is notable, with Microsoft’s year-to-date loss exceeding Amazon’s by 3.4 percentage points [1]. This contraction is not merely a technical correction but a direct response to growing investor fatigue regarding the escalating costs of artificial intelligence infrastructure [3].

The Cost of Ambition

The focal point of this market anxiety is capital expenditure (Capex), which has reached historic levels. Microsoft’s spending for the quarter ending December 31, 2025, surged to $37.5 billion, a massive 66% increase year-over-year [1][5]. While the company delivered strong adjusted earnings per share of $4.14, beating estimates of $3.91, the sheer scale of investment required to maintain AI infrastructure has overshadowed these operational successes [1][5]. Amazon is facing similar scrutiny after outlining a Capex plan projecting $200 billion for 2026, a figure that analysts fear could push the company’s free cash flow into negative territory for the year [4][7]. Together with Meta and Alphabet, these tech titans are expected to spend a combined total of $650 billion on AI by 2026, a sum that is testing the patience of shareholders awaiting tangible returns [4].

Shifting Market Dynamics

Market participants are beginning to rotate capital based on perceived spending efficiency, favoring “vertical integrators” over pure “spenders.” Investors are moving away from Microsoft and Amazon toward Alphabet, which utilizes custom TPU chips to manage costs and has shown relative resilience; Alphabet stock is down only 9.2% from its peak, significantly outperforming its peers [4][7]. Operational metrics further complicate the picture for the bear market entrants. Microsoft’s Azure revenue grew 39% in the last quarter, yet the company admitted to lacking sufficient AI capacity for internal services like Copilot due to earlier investment pullbacks [1][5]. Conversely, Amazon Web Services (AWS) saw its market share slip to a multiyear low of 28%, despite a revenue increase of nearly 24% [6]. These figures highlight the high stakes: companies must spend aggressively to defend market share, yet that very spending is currently driving valuations down.

Awaiting the Next Catalyst

The implications of this downturn extend beyond individual tickers, weighing heavily on the broader market. The “Magnificent Seven” constitute 33.4% of the QQQ portfolio, and their weakness has dragged the Nasdaq-100 down 2.2% year-to-date as of February 13, 2026 [1]. Microsoft led this descent, entering bear market territory on January 29, 2026, with Amazon following shortly after a nine-day losing streak [7]. Attention now turns to Nvidia, which is scheduled to report earnings on February 25, 2026 [7]. This upcoming report is viewed as a pivotal moment for the AI trade; a disappointment could see Amazon shares retest support levels around $180, while a positive surprise might catalyze a much-needed reversal [7].

Sources

Capital Expenditure Bear Market