Amazon stocks plunge 9%

CNBC - Amazon shares sunk more than 9% on Friday after the company’s hefty spending forecast surprised investors who were already wary that the artificial intelligence boom is at risk of becoming a bubble.

Amazon, Alphabet, Microsoft and Meta reported about $120 billion in capital expenditures in the fourth quarter alone. That figure could exceed more than $660 billion this year, the Financial Times reported, which is higher than the gross domestic product of countries like the United Arab Emirates, Singapore and Israel.

Wall Street has responded differently to the companies’ spending plans, cheering Meta and Alphabet’s forecasts, while punishing Amazon and Microsoft.

Amazon, Microsoft, Nvidia, Meta, Google and Oracle collectively shed more than $1 trillion from their valuations over the past week, according to FactSet data.

Shares of companies developing hardware for the AI build-out will likely face continued volatility as “sentiment contagion takes hold,” Paul Markham, investment director at GAM Investments, told CNBC.