Technology stocks in the United States faced significant declines in early February 2026, with both the Nasdaq and S&P 500 suffering multiple days of losses. Investors are reassessing the sector amid concerns about swelling capital expenditures related to artificial intelligence and recent signs of softness in the labor market.
Heightened caution in equity markets stems from a combination of aggressive spending plans by leading tech firms and macroeconomic data reflecting cooling employment conditions. Over the past year, mentions of artificial intelligence drove tech stock gains, but a shift has emerged: investors are now focusing on the escalating costs of these initiatives.
Major technology companies have revealed substantial capital expenditure forecasts for fiscal year 2026. Amazon plans to invest $200 billion, Google $180 billion, Meta $122 billion, Microsoft $120 billion, Tesla $20 billion, and Apple $13 billion. Collectively, these investments total $655 billion for the sector. This unprecedented level of spending has prompted concerns about returns and the sustainability of profit margins.
The announcement of Amazon was the latest trigger in tech selloff. Amazon’s stock declined as much as 10% in post-market trading following its fourth-quarter earnings release. Despite robust sales growth and AWS outperformance, investor focus shifted to Amazon’s increased capital spending plans and a slight earnings-per-share shortfall.
Amazon reported fourth-quarter net sales of $213.39 billion, surpassing market expectations of $211.49 billion and marking a 14% rise from the prior year. Amazon Web Services (AWS) delivered revenues of $35.6 billion—exceeding the $34.8 billion consensus and achieving the highest year-on-year growth in over three years at 24%. Operating income totaled $25.0 billion, above the $24.8 billion forecast.
However, earnings per share for the period came in at $1.95, just below the expected $1.96, weighing on investor sentiment alongside volatility across technology stocks.
Amazon announced a significant capital expenditure plan for fiscal 2026, aiming to spend $200 billion compared to analyst estimates of $147 billion. The company noted that capex in 2025 totaled approximately $131 billion. Management attributed increased investment to meeting demand for artificial intelligence and the expansion of cloud infrastructure, particularly data centers and semiconductor capacity.
Investor sentiment was further dampened by new labor market statistics. Challenger, Gray & Christmas reported 108,435 U.S. job cuts in January, marking the highest monthly total since 2009 and roughly triple December’s tally. Additionally, weekly initial jobless claims rose to 231,000, surpassing expectations, while the number of continuing claims increased to 1.844 million, though this was less than forecast.
These labor data releases led to a modest increase in the probability that the Federal Reserve might reduce interest rates by 25 basis points at its March meeting, rising from around 9% to nearly 16%. The central bank maintained its policy rate at 3.5% to 3.75% last week, following three cuts over the course of 2025.
