AI Spending Wipes $1.2 Trillion from Nasdaq as Cloud Giants' Profits Slip

Wall Street was rattled after major cloud computing companies' earnings reports raised doubts about massive AI spending, wiping out about $1.2 trillion from the Nasdaq index in October, a 10% drop from its peak. Google lost over $500 billion in market value as AI-generated search summaries eroded advertising revenue, though its cloud business grew strongly on demand for its TPU chips. Microsoft and Amazon showed strong cloud growth, but Amazon's net profit fell due to the absence of prior investment gains. Free cash flow turned negative at several major firms due to trillion-dollar AI infrastructure investments. Experts warn demand could collapse during major crises like cyberattacks, potentially bursting an investment bubble, while analysts note AI agents threaten traditional business models like Google's ads and Amazon's retail.