Investors withdrew $6.65 billion from US equity funds in the week ending October 28, 2026, marking the first weekly net outflow since early October, according to data from LSEG Lipper reported by Reuters. The retreat came just as the biggest American technology companies were reporting earnings that investors had been anxiously awaiting.

At the centre of the unease is a simple question: how much is too much to spend on artificial intelligence? Microsoft, Alphabet and Amazon have all poured tens of billions of dollars into data centres and chips this year, and investors are increasingly split on whether that spending will pay off.

A split verdict on AI spending

Microsoft’s results landed well. The company reported a strong cash-flow beat and robust forecasts for its Azure cloud business, even as it trimmed its full-year capital expenditure forecast to $170 billion from $175 billion. Cantor Fitzgerald analyst Thomas Blakey said, according to CNBC, that the quarter was “further validation of Microsoft’s AI-led growth opportunity.”

Alphabet’s reception was far cooler. Despite holding its capital spending guidance steady at $195 billion to $205 billion, its shares sold off sharply on concerns over slowing advertising growth. Forrester analyst Tracy Woo noted, according to CNBC, that “Alphabet’s massive capex investment in infrastructure buildout has been tolerated for now”, a comment that hints at how quickly investor patience could run out.

Amazon also disappointed markets. On the company’s earnings call, chief executive Andy Jassy defended the pace of AI investment, asking, “Would it be more convenient if this type of acceleration and opportunity happened over 25 years?” Meta Platforms, meanwhile, moved in the opposite direction of Microsoft, raising its 2026 capex guidance to a range of $135 billion to $145 billion.

“Would it be more convenient if this type of acceleration and opportunity happened over 25 years?” — Andy Jassy, CEO, Amazon

Where the money moved instead

The outflows were not evenly spread. Large-cap equity funds lost $3.8 billion, mid-cap funds $2.11 billion, small-cap funds $832 million and multi-cap funds $303 million. Yet technology-focused sector funds bucked the trend, pulling in $4.54 billion in net purchases, part of a broader $3.52 billion inflow into sector equity funds overall, the largest in three weeks. Financial sector funds lost $713 million and healthcare funds lost $701 million over the same period.

Fixed-income markets told a steadier story. US bond funds attracted $2.04 billion in net inflows, recovering from the prior week’s net sales of $969 million. But the sharpest single move was in cash: money market funds saw $47.66 billion flow out, a reversal from roughly $14.97 billion of inflows the previous week.

Taken together, the figures from LSEG Lipper and Reuters suggest investors are not abandoning AI as a theme but are becoming far more selective about which companies they trust to spend wisely. With combined hyperscaler capital spending projected to exceed $1 trillion next year, that distinction is likely to keep driving sharp, company-specific swings in markets rather than a broad retreat from technology stocks.

This article was researched and drafted with AI assistance and reviewed by Lasse Pedersen before publication. How we use AI

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