U.S. artificial intelligence-linked equities turned volatile over the past week, as record earnings failed to support share prices and instead triggered sharp sell-offs. Traders are increasingly focusing on the cost of building AI infrastructure and the sustainability of funding, rather than headline revenue growth.
Alphabet set the tone on June 1 by announcing an $84.75 billion equity financing, despite holding $126.8 billion in cash as of March 2026. Days later, Broadcom reported $22.2 billion in quarterly revenue, up 48% from a year earlier, with AI chip income surging 143% to $10.8 billion. The results beat expectations, yet the stock dropped 15% the following session, wiping out about $280 billion in market value.
Oracle followed a similar pattern. Revenue rose 21% to $19.2 billion, while cloud infrastructure income jumped 93%. Earnings also exceeded forecasts, but shares still fell 9% in after-hours trading.
Broader sell-off hits tech and semiconductors
The earnings reactions came amid a wider market decline. The Nasdaq Composite fell 4% on June 5, its worst session since April 2025, while semiconductor stocks collectively lost nearly $1 trillion in value.
Stronger-than-expected U.S. nonfarm payrolls, which rose by 172,000, reinforced expectations of tighter monetary policy and accelerated a rotation away from high-valuation technology names.
Focus shifts to cash flow and debt
Market attention has shifted from income statements to cash flow and balance sheets, exposing the scale of funding required for AI expansion. Oracle’s operating cash flow climbed 54% to $32 billion, but free cash flow turned negative $23.7 billion after heavy borrowing and financing activity. The company plans to raise an additional $40 billion in fiscal 2027.
Broadcom also adjusted expectations, lowering its gross margin forecast from 77% to 74% as lower-margin AI components take a larger share of its business.
Analysts say traders are now demanding clearer visibility into profitability before supporting continued capital expenditure. Companies that can demonstrate monetization are holding up better, while others face growing pressure.
Financing boom raises structural risks
The AI buildout is becoming increasingly leveraged. Alphabet has raised roughly $55 billion in new debt since November, and some forecasts suggest its free cash flow could turn negative in coming years.
Other firms are following similar strategies. Oracle has leaned on debt and equity while encouraging customers to prepay or provide their own hardware. Broadcom, alongside Apollo Global and Blackstone, launched a $35 billion AI infrastructure fund aimed at delivering more than 20 gigawatts of computing capacity by 2028.
Private AI firms are also turning to large-scale financing. Reports indicate SoftBank used OpenAI equity as loan collateral, while SpaceX is moving toward a public offering targeting $75 billion. Anthropic has filed confidentially, and OpenAI is expected to pursue a listing as well.
Spending surge outpaces internal cash generation
Capital expenditure across major technology companies continues to rise rapidly. CreditSights estimates spending could reach $750 billion in 2026, about 67% higher than 2025 levels. Goldman Sachs has also raised its projection significantly, underscoring how investment is outpacing internally generated cash and increasing reliance on external funding.
Exposure within the ecosystem remains concentrated. More than half of Oracle’s $638 billion in pending orders are tied to OpenAI, while Broadcom depends on a small group of major clients including Google, Meta, Anthropic, and OpenAI. Many of these buyers remain unprofitable, linking the broader system to a narrow and leveraged customer base.
Crypto markets fall alongside tech
The reassessment of AI valuations has spilled into digital assets, which often move in tandem with high-growth technology stocks. The total cryptocurrency market lost an estimated $180 billion over the past week.
Bitcoin fell below $63,000, extending its year-to-date decline to nearly 30%. At the same time, U.S. spot ETF outflows reached about $1.72 billion in early June, signaling a pause in institutional demand.
A once-strong correlation between Bitcoin and semiconductor stocks has also weakened, with the 30-day correlation dropping from 0.55 to 0.27 since the start of the year. The Coinbase Premium Index turned negative, indicating reduced buying pressure from U.S.-based traders.
Outlook tests demand for ai funding
As SpaceX prices shares at $135 ahead of its market debut, traders are watching closely for signs of sustained appetite for large-scale AI and technology offerings.
The past week suggests a turning point. Strong earnings are no longer enough to lift valuations, as markets scrutinize how much of the AI expansion is supported by borrowing rather than durable cash flow. Assets reliant on abundant liquidity and future growth assumptions now face increasing pressure in a tighter financial environment.
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