Big Tech stocks were a mixed bag on Monday, after a bruising week that saw more than $1 trillion wiped from their market caps.
Oracle climbed 9% and Microsoft gained 3%. Nvidia and Meta each added more than 2%. Alphabet inched higher. Amazon shares sank slightly.
Oracle got a boost from D.A. Davidson‘s upgrade on the stock.
The market grew jittery after expenditure outlooks continued to shoot through the roof in Big Tech earnings last week, as companies doubled down on AI bets.
Amazon, Alphabet, Microsoft and Meta reported a combined capital expenditure of about $120 billion in the fourth quarter alone. The figure could approach $700 billion in 2026, higher than the gross domestic product of countries like the United Arab Emirates, Singapore and Israel.
Jim Reid, head of global macro research at Deutsche Bank, wrote in a Monday note that last week was the worst for the “Magnificent 7” stocks since April, when U.S. tariffs plunged markets into crisis and the stocks fell 4.66%.
Signs of recovery were on show as the markets closed last week, with Magnificent 7 stocks rising 0.45% on Friday, despite Amazon falling 5.55%, Reid said.
Cloud companies’ growing margins come alongside “potential stock volatility” amid macro headwinds, said Justin Post, a research analyst at Bank of America Securities, in a note on Monday.
“But management teams seem confident in their ability to forecast demand and that capacity will be fully utilized in 2026,” he added.
The markets reacted negatively to Amazon and Alphabet’s capex guidance being “well above” consensus expectations, said David Lefkowitz, CIO head of US equities at UBS Financial Services on Friday, adding this “overshadowed stronger-than-expected cloud growth for both companies.”
Nvidia CEO Jensen Huang told CNBC’s “Halftime Report” on Friday that the tech industry’s surging capital expenditures for AI infrastructure were justified, given the “sky high” demand for computing power.
Analysts predict room to grow for hyperscaler capex.
“As monthly tokens processed grows exponentially, aggregate cloud revenue for GCP/AWS/Azure accelerates, data center commitments expand, and data center component suppliers highlight accelerating demand, we believe there will continue to be upward pressure on hyperscaler capex estimates,” Morgan Stanley said in a note on Monday morning.