The tech-heavy Nasdaq Composite Index finished October 2025 on a high note, buoyed by strong earnings from the sector's biggest names. Investors cheered as giants like Amazon, Alphabet, Microsoft, and Meta posted record revenues and profits. Yet beneath the surface, a significant trend has emerged—massive capital expenditure on artificial intelligence (AI).
While Amazon led gains with a 9.58% rise on October 31st, other tech titans faltered. Alphabet, Microsoft, and Meta all slipped into the red, reflecting investor concerns over the industry's aggressive push into AI. The most vocal criticism targeted Facebook's parent company, Meta, and its CEO Mark Zuckerberg.
Are these mega-cap tech firms risking a repeat of the dotcom bubble that burst in 2000? The question hangs in the air as these companies pour billions into AI, raising alarms about overinvestment and market stability.
Earnings Growth Highlights Tech's Resilience
Amazon reported a net income of $21.2 billion in Q3 2025, a 38.2% increase from the same period last year. CEO Andy Jassy highlighted Amazon's momentum, stating, 'We continue to see strong growth across Amazon as AI drives meaningful improvements in every part of our business.'
The retail giant's capital expenditures soared 61% year-on-year to $34.2 billion, primarily allocated to data centres and chips to develop AI models for text, images, and process automation.
Alphabet achieved a milestone, surpassing $100 billion in quarterly revenue for the first time. Its net income for Q3 2025 rose 33% to $34.9 billion. CEO Sundar Pichai emphasised the importance of AI: 'Our full-stack approach to AI is delivering strong momentum. We're shipping AI Overviews and AI Mode in Search at record speed.' This year alone, Alphabet's CAPEX could total up to $93 billion.
Microsoft's CEO Satya Nadella echoed this sentiment, stating: 'Our cloud and AI factory, along with Copilots across high-value domains, is driving broad diffusion and real-world impact. We're increasing investments in AI across capital and talent to seize the massive opportunity ahead.' In Q1 fiscal 2026, Microsoft's net earnings rose 12% to $27.7 billion, with cloud revenue hitting $49.1 billion—a 26% increase. CAPEX during this period approached $350 million.
Meta's Bold AI Push and Financial Challenges
Meta's Q3 results reflect both the sector's growth and its risks. The company reported a one-time $18.95 billion tax expense, causing net income to plummet 83% to $2.7 billion, despite a 26% rise in revenue to $51.2 billion year-on-year. CEO Mark Zuckerberg stated that the non-cash income tax charge was due to the implementation of the President's One Big Beautiful Bill Act.
Zuckerberg defended Meta's aggressive AI investments, citing the 'necessity to stay ahead in the AI race.' Notably, the company's hardware division incurred a $4.4 billion loss during the quarter. Zuckerberg also highlighted the successful launch of Meta Superintelligence Lab, though the company plans to allocate up to $72 billion in AI investments this year, primarily using free cash flow to build AI infrastructure.
Rising Concerns and Increased Scrutiny
The scale of AI investment among these tech giants is unprecedented outside of the dotcom bubble era. Unlike startups in the late 1990s, today's players are established giants with substantial cash reserves and global reach. However, this aggressive spending has inevitably attracted scrutiny from regulators and market analysts.
While the companies have compelling reasons to push forward—maintaining competitive advantage, capturing AI-driven market share, and fulfilling investor expectations—the risk is that these investments may not yield immediate results. The pressure to deliver tangible outcomes will intensify in the coming quarters.
Market Stability at Risk?
Historically, excessive speculation and overinvestment in unproven technologies have led to market crashes. The current AI arms race, with firms pouring billions into infrastructure and talent, echoes the overexuberance that preceded the dotcom bust.
Investors remain optimistic, but caution is advised. As these tech giants navigate the fine line between innovation and overreach, the coming months will be critical in determining whether AI spending sustains growth or signals the onset of a bubble.
While the recent earnings reports showcase resilience and growth, the massive capital expenditure on AI by the world's biggest tech firms raises questions about sustainability and market stability. With heightened scrutiny looming, the tech industry's AI gamble could either cement their dominance or lead to a new bubble bursting.
Disclaimer: Our digital media content is for informational purposes only and does not constitute investment advice. Please conduct your own analysis or seek professional guidance before investing. Remember, investments are subject to market risks, and past performance does not guarantee future results.
