8 consecutive declines! Amazon, with the "highest capital expenditure," falls into a bear market as investors "vote with their feet" on Mag 7.

Amazon shares officially entered a technical bear market after eight consecutive trading days of decline, becoming the second Mag7 company to fall into a bear market. Investors are fiercely resisting the tech giants' aggressive AI spending plans, resulting in a significant drop in these star stocks. On Thursday, Amazon shares closed at $199.60, down 21.4% from the recent high, officially breaking through the bear market threshold. Among the four major hyperscale cloud service providers, Amazon has the highest planned capital expenditure for 2026, reaching $200 billion. The combined capital expenditure in AI by Amazon, Microsoft, Meta, and Alphabet is expected to reach $650 billion by 2026. Meta may be the next Mag7 member to enter a bear market, with its share price only 2.3% away from the bear market threshold. Although Meta's fourth-quarter revenue and profit exceeded Wall Street expectations, increased AI spending and margin pressure have undermined investor confidence. Microsoft was the first Mag7 member to enter a bear market. Its shares entered a bear market on January 29, following disappointing Azure cloud business growth reported the previous day. As of Thursday's close, Microsoft shares were down 25.9% from the recent high. Investors rotate within Mag 7, free cash flow pressures emerge Mike Treacy, Vice President of Risk at Apex Fintech Solutions, said the recent sell-off highlights the growing divergence among Mag7 members. Since last autumn, investors have pulled out from OpenAI-related trades with Microsoft, Nvidia, and Oracle, and instead have favored the Alphabet and Broadcom ecosystems. Treacy noted that Alphabet's vertically integrated tech stack partially offsets concerns about excessive spending, making its shares less vulnerable to the worst tech stock sell-offs. As of Thursday's close, Alphabet shares were down 9.2% from recent highs. Treacy said Google's self-sufficiency should command a premium relative to other companies, which may be adversely affected by a single link in the industry chain. Amazon, Microsoft, and Meta shares have suffered greater hits because investors lack confidence that their AI spending will deliver sufficient returns. In Amazon's case, increased capital expenditure may cause its free cash flow to turn negative this year, meaning the company will need to start raising more capital in the debt markets. Treacy believes the next important catalyst for AI trades will be Nvidia's earnings report on February 25. This report will show whether the AI boom is cooling down or if Nvidia is successfully capturing billions of dollars invested by its largest customers in the field. Risk Warning and Disclaimer The market has risks; investment requires caution. This article does not constitute personal investment advice, nor does it consider the individual investment goals, financial situation, or needs of any user. Users should consider whether any opinions, views, or conclusions in this article are suitable for their specific circumstances. Any investment based on this is at your own risk.