MW AI spending fears drove Amazon's stock into a bear market, alongside Microsoft's
By Christine Ji
Big Tech stocks are being hit by fears of AI overspending, but some are more at risk than others
Shares of Amazon and Microsoft have officially retreated more than 20% from recent highs.
This story has been updated to clarify the differing Wall Street views of what constitutes a bear market.
Investors are pushing back hard against Big Tech's aggressive artificial-intelligence spending plans, causing shares of the "Magnificent Seven" companies to fall dramatically.
After eight consecutive days of losses, shares of Amazon.com (AMZN) have officially tumbled into a technical bear market, meaning that they're off 20% or more from a significant high. Amazon's stock closed at $199.60 on Thursday, 21.4% below its Nov. 3 record close of $254.
Among the four major hyperscalers, Amazon has the highest amount of planned capital expenditures for 2026, at $200 billion. Amazon, Microsoft $(MSFT)$, Meta Platforms (META) and Alphabet $(GOOGL)$ (GOOGL) are expected to spend a cumulative $650 billion on AI capex in 2026.
Amazon joins Microsoft as the second "Magnificent Seven" name that's fallen into bear-market territory. Shares of Microsoft entered a bear market on Jan. 29, one day after the company reported Azure cloud growth that fell short of investors' expectations. As of Thursday's close, Microsoft's stock was down 25.9% from its Oct. 28 record close of $542.07.
Read: Why Amazon's AI spending triggered the stock's worst slide in over a year
The recent selloff highlights a growing rift between members of the "Magnificent Seven," Mike Treacy, vice president of risk at Apex Fintech Solutions, told MarketWatch.
AI spending fears have been building for many months. After Meta raised its capex outlook on its third-quarter earnings call in October, the stock plummeted and entered a bear market on Nov. 4. Whether Meta's stock has escaped that bear territory remains a point of technical debate.
Many on Wall Street will say a new bull market is typically signaled when a stock gains 20% off a bear-market low, while others might say it also has to surpass a previous significant high.
While Meta's stock had run up 25.3%, from its Nov. 20 bear-market closing low of $589.15 to its Jan. 29 high of $738.31, that high was still well below the Aug. 12 record of $790. Through Thursday, the stock had lost has 12% since Jan. 29, and was 17.7% below its Aug. 12 peak.
Since the fall, investors have also begun rotating out of the OpenAI trade associated with names like Microsoft, Nvidia (NVDA) and Oracle $(ORCL)$ amid rising concerns over circular financing deals. Instead, they've begun favoring the Alphabet and Broadcom $(AVGO)$ ecosystem, Treacy said.
Alphabet's vertically integrated tech stack has offset some of the overspending fears and shielded the stock from the worst of the tech selloff, Treacy added. Shares of Alphabet closed on Thursday down 9.2% from their Feb. 2 record close of $343.69.
"I do think Google's self-sufficiency should command a premium relative to the others that could be adversely impacted by one cog in the wheel," Treacy said, referring to Google's proprietary tensor processing units.
On the other hand, shares of Amazon, Microsoft and Meta are being hit harder as investors are less confident about those companies' abilities to deliver a sufficient return on investment on their AI spending. For Amazon, increased capex levels could push its free cash flow into negative territory this year, meaning that it would need to start tapping the debt markets to raise more capital.
However, despite the recent selloff, the market remains in better shape than it was during the last downturn, which was exacerbated by the "Liberation Day" selloff in April of last year. In early 2025, all of the "Magnificent Seven" names were in bear markets.
The Roundhill Magnificant Seven ETF MAGS closed Thursday 10.6% below its Oct. 29 record close of $69.06. At the April 8, 2025 closing low of $40.50, the ETF was 30.5% below the Dec. 17, 2024 peak of $58.24.
The next big catalyst for the AI trade will be Nvidia's earnings report on Feb. 25, according to Treacy. The results will show whether the AI boom is cooling, or if Nvidia is successfully capturing the billions its biggest customers are pouring into the trade.
Read: Nvidia and Oracle are flashing similar warning signs about the AI trade
-Christine Ji
This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
February 13, 2026 13:20 ET (18:20 GMT)
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