Big Tech shares tumbled this week as investors questioned the cost of building AI infrastructure. Google had its worst day ever, while Intel fell more than on any day since the Nixon administration. The Nasdaq is just over a percentage point from a 10% correction. Yet spending continues. AI investment has reached $1.6 trillion since 2023 and is expected to hit $1 trillion a year for about a decade, according to JPMorgan. The bond market is funding much of it. Goldman Sachs expects hyperscalers to issue about $250 billion in bonds this year and estimates $510 billion of investment-grade debt is available to them. The key question, the analysis argues, is how long lenders will keep financing the spree. Rising yields could lift borrowing costs, as CoreWeave's bonds, which surged to 15%, show.

Big tech's AI spending is straining the legacy businesses that fund it. Meta, Alphabet, and Amazon reported negative free cash flow this quarter, leaving Microsoft as the only hyperscaler still positive. Meta's outflow was $2.12 billion, Alphabet's $9.07 billion, and Amazon's $42.4 billion. Microsoft's free cash flow fell 27% to $18.63 billion, its second straight sharp decline, and it will now turn to the bond market. Alphabet's search growth slowed for a third straight quarter, and its shares had their steepest drop ever. Amazon expects capital expenditure of $220 billion this year, while Meta plans to raise $95 billion in stock. Bullish investors say the giants' dominant core businesses can carry the spending.

Meta has quietly launched Style Sketch, an AI app that helps users plan outfits from clothes they already own. It is available on iOS and Android in Indonesia, Singapore, and Thailand. The app builds a virtual closet from a user's Instagram photos, or users can add items by photo, video, or camera roll upload. It then suggests outfits and lets users try them on a model matched to their body shape and skin tone. Users can also plan trips by entering a destination, trip length, and activities to get a day-by-day outfit plan that accounts for weather. Meta has not said whether it will expand the app. It is one of several recent AI apps from the company, as chief executive officer Mark Zuckerberg pushes to release more apps.