The United States spends roughly $1 trillion a year on defense. Five tech giants are heading for a number that’s uncomfortably close, and they’re spending it on chips and server rooms.
On Friday, October 30, investors finally asked the question everyone had been whispering: when does all this pay off?
What Happened
Amazon, Alphabet, Microsoft, Meta and Elon Musk’s SpaceX, which includes xAI, are set to invest as much as $828 billion in capital expenditures this year, based on their latest disclosures. That covers data centers, high-powered chips and other AI infrastructure.
That bill has surpassed the market value of ExxonMobil and Mastercard, and it’s approaching the roughly $1 trillion America is spending on defense this fiscal year.
Then came the selloff. The Nasdaq Composite fell 2.86% and the S&P 500 dropped 1.82%. Nasdaq 100 companies lost more than $1 trillion in market value, and both indexes had their worst day since June.
The Casualties
- Intel: Its worst day since 1974. The company warned that fourth-quarter profits and sales would be lower than expected.
- Nvidia: It fell 4.2% and lost its $5 trillion market capitalization.
- Amazon: Its AI spending ran faster than expected last quarter while growth in its core online shopping business slowed.
If this sounds familiar, it should. Earlier this week, we covered Alphabet’s record $500 billion drop. This is the bigger picture it fits into.
