Nine consecutive declines! The "highest capital expenditure" Amazon has entered a bear market, and investors are "voting with their feet" on Mag 7

Amazon shares decline for nine consecutive weeks. On Thursday, the stock entered a technical bear market, becoming the second company among the Mag7 to fall into a bear market, and continued to slide on Friday. Investors launched strong resistance against the tech giants’ aggressive AI spending plans, causing these star stocks to drop sharply.

On Friday, Amazon closed at $198.79, down more than 23% from its recent high, and on Thursday, it officially broke below the bear market threshold. Among the four major cloud service providers, Amazon plans the highest capital expenditure in 2026, reaching $200 billion. Amazon, Microsoft, Meta, and Alphabet are expected to spend a total of $650 billion on AI in 2026.

Meta may become the next Mag7 member to enter a bear market. As of Friday’s close, it has fallen 19.6% from its peak last year, just 0.4% shy of the 20% decline threshold for a bear market. Despite Meta’s Q4 revenue and earnings surpassing Wall Street expectations, increased AI spending and profit margin pressures have shaken investor confidence.

Microsoft is the first Mag7 member to enter a bear market. The company’s stock fell into a bear market on January 29, after its Azure cloud business growth the previous day failed to meet investor expectations. As of Friday’s close, Microsoft shares are down 27.8% from their recent high.

(Amazon, Microsoft, and Meta one-year chart)

Investors rotate within the Mag7, with free cash flow pressures becoming more apparent

Apex Fintech Solutions Vice President of Risk Mike Treacy said that recent sell-offs highlight the growing divergence among Mag7 members. Since last fall, investors have pulled out of OpenAI-related trades involving Microsoft, Nvidia, and Oracle, shifting favor toward Alphabet and Broadcom ecosystems.

Treacy pointed out that Alphabet’s vertically integrated tech stack somewhat offsets concerns over excessive spending, shielding its stock from the worst of the tech sell-off. Alphabet’s stock closed Thursday down 9.2% from its recent high. Treacy said that Google’s self-sufficiency should command a relative premium over other companies, which might be affected by adverse conditions in certain parts of the supply chain.

Amazon, Microsoft, and Meta stocks have suffered larger declines because investors lack confidence that their AI spending will generate sufficient returns. For Amazon, increased capital expenditure could turn its free cash flow negative this year, meaning the company may need to start raising more capital through debt markets.

Treacy believes that the next major catalyst for AI trading will be Nvidia’s earnings report on February 25. This report will reveal whether the AI boom is cooling off or if Nvidia has successfully captured billions of dollars in investments from its largest clients in the field.

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