"A sharp selloff in tech stocks on Thursday underscored investors' exhaustion with the "spend now, profit later" model that has propelled the AI bull market for three years. Microsoft led the retreat, with its shares plummeting 12% by noon, erasing more than $440 billion in market value, a collapse it hasn't seen since the pandemic. The NASDAQ was down almost 2% at time of writing."
"The immediate catalyst, it seems, is an intensifying focus on capex. Microsoft revealed that its spending surged 66% to $37.5 billion in the latest quarter, even as growth in its Azure cloud business cooled slightly. Even more concerning to analysts, however, was a new disclosure that approximately 45% of the company's $625 billion in remaining performance obligations (RPO)-a key measure of future cloud contracts-is tied directly to OpenAI, the company revealed after reporting earnings Wednesday afternoon. (Microsoft is both a major investor in and a provider of cloud-computing services to OpenAI)."
Investors' multi-year bet on AI faces a severe test as perceptions of OpenAI and generative AI shift from growth catalysts to potential systemic risks for Big Tech. A sharp tech selloff reflected fatigue with the "spend now, profit later" model, with Microsoft shares plunging about 12% and erasing over $440 billion in market value while the NASDAQ fell nearly 2%. Capital expenditures have surged: Microsoft reported a 66% increase in spending to $37.5 billion and disclosed roughly 45% of $625 billion in remaining performance obligations tied to OpenAI. Meta showed 24% revenue growth and plans significant CapEx.
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