Big Tech’s Data Center Blitz Is Burning Through Cash and Scaring Wall St.

Four of the tech industry’s biggest companies set a spending record in the last quarter as they raced to build artificial intelligence, leading to a worrisome new milestone: Most of them are spending more cash on data centers than they get from running their businesses.

Over the past two weeks, Amazon, Microsoft, Google and Meta said they were on track to spend more than $720 billion this year on data centers and other capital expenses — roughly triple what they spent just two years ago. And all are expected to spend even more next year. The investments are so large, the A.I. boom accounts for much of the resilience in the U.S. economy.

The buying binge has sent the companies scrambling to fund their ambitions by taking out loans and in some cases selling more stock to get the cash they need. While their core businesses generally remain healthy, those moves have unsettled investors who worry whose bets will pay off.

A sell-off in tech stocks accelerated on Friday, with the Nasdaq dropping more than 2 percent in early trading, as investors digested all the latest reports from the biggest A.I. spenders.

Google reported underwhelming results Wednesday, and by the time markets closed on Thursday, Google’s stock had fallen more than 12 percent, erasing its gains for the year. Then, on Thursday, after Amazon reported its results showing heavy spending, its shares traded down, too. Last week, Meta’s shares fell 7 percent after its results showed it was using so much cash that the company was issuing new stock to raise funds.

“Slight differences is causing a lot of volatility,” said David Tsui, a technology credit analyst at S&P Global Ratings. He said there could be several more years of uncertainty because “you’re spending now and a lot of the return is going to be years down the road.”