Forget the War Headlines: This Is the Real Reason Tech Stocks Are Struggling

By Lyle Daly – Mar 19, 2026 at 1:19AM ESTKey PointsInvestors are uncertain about tech companies because of AI spending, not the Iran war.Four major hyperscalers spent $410.2 billion last year, and there's concern about whether the returns will justify that kind of investment.Tech stocks have been shaky lately, and the Iran war may seem like the likely explanation. Military conflicts increase uncertainty in the stock market, which can increase volatility, and tech already tends to be more volatile than other sectors. However, the tech sector has been in a slump since before the war started on Feb. 28. The tech-heavy Nasdaq-100 index is down over 3% on the year through March 13. The real reason for the recent slowdown is a different source of uncertainty: massive capital expenditures (capex) in artificial intelligence (AI) infrastructure by hyperscalers. Image source: Getty Images. Four, in particular, are leading the charge: Alphabet (GOOG 1.00%)(GOOGL 1.00%), Amazon, Meta Platforms, and Microsoft. They combined for $410.2 billion in capex spending in 2025, according to recent research by The Motley Fool, and they're all projected to spend even more in 2026. While the market was largely bullish on AI technology until late last year, investors have grown more concerned about the returns this staggering spending will generate. Compounding the issue is that components in AI data centers don't last long. The latest technology quickly becomes outdated, or components simply break down due to heavy use. That said, the companies spending the most on AI infrastructure can afford it, as they're highly profitable. Alphabet has reported $132.2 billion in net income over the trailing 12 months (TTM) and has a strong balance sheet with $126.8 million in cash and cash equivalents at the end of 2025. Amazon, Meta, and Microsoft are all in strong financial positions, as well. ExpandNASDAQ: GOOGLAlphabetToday's Change(-1.00%) $-3.12Current Price$307.80Key Data PointsMarket Cap$3.7TDay's Range$306.93 - $312.4852wk Range$140.53 - $349.00Volume936KAvg Vol33MGross Margin59.68%Dividend Yield0.27% It's capex spending, and not the Iran war, that has caused investors to pull back on top tech stocks. But if you're bullish on AI and the tech sector as a whole, this is a buy-the-dip situation, not a reason to sell your holdings.Read NextMar 18, 2026 •By Chris NeigerWhat Sundar Pichai's $692 Million Pay Package Says About Alphabet's Next ChapterMar 18, 2026 •By Trevor JennewineBillionaire Chase Coleman Has 20% of His Portfolio Invested in 2 Brilliant AI Stocks (Hint: Not Palantir)Mar 17, 2026 •By Sean WilliamsGoogle Parent Alphabet's $346 Billion Investment Is Providing a Big Lift to Its Bottom Line -- but It Has Nothing to Do With Artificial Intelligence (AI)Mar 16, 2026 •By Sean WilliamsHyperscalers Are Spending Nearly $700 Billion in 2026 on AI Infrastructure -- but This Pales in Comparison to the Estimated $1 Trillion Spent by S&P 500 Companies on Another "Growth" InitiativeMar 15, 2026 •By Geoffrey Seiler2 Artificial Intelligence Stocks You Can Buy and Hold for the Next DecadeMar 15, 2026 •By Keith SpeightsThe Best Tech Stocks to Invest $50,000 in Right NowAbout the AuthorLyle Daly is a contributing Motley Fool stock market analyst covering information technology and cryptocurrency. Lyle has been a contributor at the financial services company since 2018. His work has been featured on USA Today, Yahoo Finance, MSN, Fox Business, and Nasdaq. Before joining The Motley Fool, he wrote for financial brands including Intuit.TMFLyleDalyX@LyleDalyStocks MentionedAlphabetNASDAQ: GOOGL$307.80(-1.00%)-$3.12Meta PlatformsNASDAQ: META$615.88(-1.09%)-$6.78MicrosoftNASDAQ: MSFT$391.93(-1.87%)-$7.48AmazonNASDAQ: AMZN$209.87(-2.48%)-$5.33AlphabetNASDAQ: GOOG$306.39(-0.98%)-$3.02*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.