AI spending is not all equal. Wall Street rewards hyperscalers, punishes DoorDash and Duolingo
Duolingo, Doordash and Roblox apps
Tiffany Heard-Grear | Bloomberg | Getty Images
Across the tech sector this earnings season, companies told Wall Street to get ready for ramped up spending as the artificial intelligence boom accelerates.
But while investors largely rewarded the megacaps for their boosted capital expenditure forecasts, or just shrugged off their guidance, companies outside the trillion-dollar club are getting punished.
DoorDash, Duolingo and Roblox all saw their stock prices suffer double-digit slumps after the companies said spending is on the incline, raising concerns about future profitability. Unlike the tech giants, which are promising hefty buildouts to meet soaring demand for AI services and workloads, smaller companies are getting viewed more skeptically, with analysts uncertain about whether their bets will pay off and result in substantial new revenue opportunities.
“Investors don’t like investment cycles,” Evercore ISI’s Mark Mahaney told CNBC’s “Closing Bell: Overtime” last week. That’s what happened, he said, with “all those companies that went into and out of this earnings cycle and negatively surprised the market by saying, ‘We really want to lean into investments first.'”
DoorDash’s stock sank 17% on Thursday, its worst drop in the food delivery platform’s five years as a public company. In its third-quarter earnings report, DoorDash said it plans to shell out “several hundred million dollars” on new products and technology next year.
“We wish there was a way to grow a baby into an adult without investment, or to see the baby grow into an adult overnight, but we do not believe this is how life or business works,” the company wrote in its earnings release.
DoorDash has recently amped up investments in autonomous delivery, with the launch of Dot in September, and spent a combined $5.1 billion on restaurant booking platform SevenRooms and British food delivery service Deliveroo.
CEO Tony Xu said on the earnings call that the company’s investment track record signals “some success in repeating this playbook, and we’re doing this now for future growth.”
Analysts see it differently.
“Looking ahead, we maintain our Hold rating as we see limited multiple expansion opportunity until there is greater clarity surrounding how long investments could weigh on margins,” wrote analysts at Gordon Haskett.
A DoorDash spokesperson said in a statement that the company is “fortunate to have an increasingly successful core business” and that it takes a “disciplined investment approach” to new projects.
‘Monetization and user growth at odds’
Duolingo also had its worst day as a public company on Thursday, despite beating on revenue and bookings in its third-quarter earnings report.
The stock lost a quarter of its value and is now down 41% for the year, after Duolingo said it’s prioritizing finding new users. The company has been pouring money into AI features, such as an interactive video call option, as it tries to win over paying subscribers.
“There are experiments that put monetization and user growth at odds, and part of my job has been, always, arbitrating between these two,” CEO Luis von Ahn told CNBC after the earnings report. He said the company is shifting the “trade off to be much more towards user growth.”
On the earnings call, von Ahn said that it’s “going to take some time for us to see the results, financial results, over the long-term investments that we’re doing.”
After the report, analysts at KeyBanc Capital Markets downgraded the stock to the equivalent of hold from buy, citing concerns that increased investments will weigh on near-term bookings, earnings and valuation.
“This suggests to us that it might take several quarters to see more meaningful financial benefits,” the firm said.
Duolingo didn’t provide a comment.
Meanwhile, the biggest companies in the tech industry may similarly be years away from seeing if their big AI wagers result in profits. But investors aren’t terribly concerned.
Alphabet and Amazon both rallied after reporting earnings in late October. The companies again raised their forecasts for capital expenditures for the year and suggested that there’s no slowdown coming in 2026.
Amazon Web Services is the leading provider of cloud infrastructure, a market where Google is third, and is racing to build out data centers to meet expected demand for compute capacity tied to AI. AWS and Google are also investing in their own silicon so that they’re less dependent on Nvidia and can offer customers a more complete tech stack.
Microsoft, which is second in the cloud infrastructure market, slipped after its earnings report, which also included a guide to higher capex. But the company, valued at close to $4 trillion, still mostly has the backing of Wall Street as it competes for more AI deals and bigger workloads.
The exception among the megacaps is Meta, which sank 11% following earnings. The company expects to spend as much as $72 billion this year on capex, but doesn’t sell a cloud service that rivals Amazon, Google and Microsoft.
Meta CEO Mark Zuckerberg wears the Meta Ray-Ban Display glasses, as he delivers a speech presenting the new line of smart glasses, during the Meta Connect event at the company’s headquarters in Menlo Park, California, U.S., Sept. 17, 2025.
Carlos Barria | Reuters
While Meta says it’s infusing AI across its product portfolio and improving targeting in its core ad business, the lack of clarity surrounding revenue is giving investors pause. Mahaney grouped Meta in with companies that he said “negatively surprised” the market.
Roblox was also in that category.
Shares of the online gaming platform fell almost 16% on Oct. 30, after the company warned that higher spending on safety and infrastructure could hit margins. CEO David Baszucki told CNBC’s “Squawk on the Street” that safety on its platform was a “top priority.”
Finance chief Naveen Chopra said the investments may weigh on near-term engagement and bookings but are “a magnifier of longer-term growth.”
Analysts at Benchmark downgraded shares to hold from buy, expecting investments will hinder profitability. Roth analysts, who recommend holding the stock, also see a potential hit to margins next year.
“The impact from these initiatives may negatively impact platform engagement in the near term,” the analysts at Roth wrote, “but is expected to have a greater long-term benefit for users.”
Roblox didn’t provide a comment for this story.
Go back a decade and most Americans had never heard of Huawei. Today, the Chinese telecom giant is a symbol of how quickly China can dominate a strategic technology sector and in the process create new national security and market threats for U.S. government and industry.
Democratic Senator Mark Warner of Virginia, the top Democrat on the Senate Select Committee on Intelligence, is now worried about another Chinese company that he predicts will eclipse Huawei in both scale and consequence: BGI. It is not building cell towers or smartphones for the 5G era. It is collecting DNA.
“If Huawei was big, BGI will be even bigger,” Warner said at the CNBC CFO Council Summit in Washington, D.C. on Wednesday.
BGI is one of the largest genomics companies in the world. It operates DNA sequencing laboratories in China and abroad. It processes genetic data for hospitals, pharmaceutical firms and researchers across dozens of countries, according to a recent report by the National Security Commission on Emerging Biotechnology.
The company began as a Beijing-based research entity, the Beijing Genomics Institute, tied closely to China’s national genome projects. It later expanded into a global commercial powerhouse, selling DNA sequencing, prenatal testing, cancer screening, and large-scale population genetic analysis, according to an NBC News report.
Through subsidiaries, BGI says it operates in the U.S. Europe, and Japan. In several countries, it helped built national genetic databases and pandemic testing systems.
A man visits the booth of BGI at the Healthy Life Chain area of the third China International Supply Chain Expo CISCE in Beijing, capital of China, July 16, 2025.
Xinhua News Agency | Xinhua News Agency | Getty Images
U.S. intelligence officials believe that global footprint gives BGI access to one the largest collections of genetic data on Earth. Lawmakers have warned that genetic data is not just medical information. At scale, it becomes a strategic asset spurring a “DNA arms race,” according to a Washington Post report. DNA profiles can reveal ancestry, physical traits, disease risk, and family relationships, and when linked with artificial intelligence, the data can also be used for surveillance, tracking and long-term biological research tied to national security, according to the Washington Post’s reporting.
At the CNBC event this week, Warner continued to press for more focus on BGI. “They are hoovering up DNA data,” Warner said. “This level of experimentation on humans and intellectual property theft, we all should be concerned about it.”
Congressional investigators have previously warned that BGI maintains close ties to the Chinese Communist Party and Chinese military, according to a report from the House Select Committee on the CCP. They argue that China makes little distinction between commercial data and state security needs.
The ‘super soldier’ fear
One of the biggest fears tied to BGI and China’s broader biotech push is the possibility of a genetically enhanced soldier. U.S. officials have publicly claimed that China has explored human performance enhancement and military biotechnology. U.S. defense analysts say China’s research spans population DNA collection, military databases, and AI-driven human performance modeling, according to a Wall Street Journal op-ed written by U.S. Director of the Central Intelligence Agency John Ratcliffe in 2020, when he was Director of National Intelligence during President Trump’s first term.
Warner directly referenced those concerns this week.
“It’s terrifying,” Warner said.
Troops make preparations before a military parade in Beijing, capital of China, Sept. 3, 2025.
Xinhua News Agency | Xinhua News Agency | Getty Images
Warner described China as a great nation and great competitor, and as a former telecom executive (he was among the founders of Nextel), he said what Huawei was able to execute on — producing good products at inexpensive prices before the U.S. and Western competitors were prepared — is a cautionary tale.
The BGI story looks uncomfortably familiar to Warner.
“Go back in time eight or nine years, and most people had never heard of Huawei,” he said.
Huawei rose by combining massive state support, global market access and aggressive pricing, not only outcompeting Western firms on scale and cost, but positioning itself inside the world’s telecom infrastructure before governments understood the security implications. Huawei was first placed on a U.S. trade blacklist in 2019, which banned U.S. firms from selling some technology to the Chinese tech giant over national security concerns. Chip restrictions on Huawei have since become even stricter.
But Warner said by the time the U.S. moved to restrict Huawei, “[we started to] lose a little.”
Much of the 5G backbone had already been shaped by Chinese technology.
During a separate interview with Javers at the CNBC CFO Council Summit, the Republican Chairman of the House committee on the Chinese Communist Party, Michigan congressman John Moolenaar, said “We’ve seen how they run the play of excess capacity, price manipulation, driving people out of business in different areas; they’re going to continue to run that play,” he said. “We want to be friendly with China, but China is not our friend. They are our foremost adversary,” he added.
The Soviet Union was a military and ideological competitor, but China, in tech domain after domain, Warner says — from telecom and 5G to AI, quantum computing and biotech — is a different kind of competitor.
Warner now sees BGI following a similar model in biotechnology. Like Huawei, BGI scaled rapidly with state support. The Washington, D.C.-based think tank Foundation of Defense of Democracies called upon lawmakers of both parties earlier this year to restrict BGI’s access to U.S. institutions.
Congress has been trying to pass various versions of the BIOSECURE Act, which would limit the ability of Chinese biotechs to operate in the U.S. Some U.S. hospitals and research institutions with ties to Chinese genomics firms are under federal pressure, according to the Associated Press, though some medical professionals within the U.S. say they risk losing key research support for core medical goals. BGI told the AP that the bill is “a false flag targeting companies under the premise of national security. We strictly follow rules and laws, and we have no access to Americans’ personal data in any of our work,” it said.
U.S. intel has moved too slowly, and disrupted key spying alliances
Warner said the U.S. intelligence apparatus has moved too slowly to recognize the biotech threat. He says that intelligence agencies focus too much on foreign governments and militaries, with less attention placed on commercial technology sectors. But in a world where technology supremacy is national security, Warner says more of our intelligence efforts need to reflect this shift.
Only in the past two to three years, he says, has the U.S. seriously expanded spying into AI, semiconductors, and biotechnology. Warner says we need a more “advanced approach” in this area, and he gave as one recent example when China’s largest chipmaker SMIC stunned U.S. officials by producing a six-nanometer chip despite sweeping U.S. export controls. The breakthrough showed that Washington had underestimated both China’s technical qualities and ability to work around restrictions. “We got caught off guard with the SMIC six-nanometer chip,” Warner said.
Warner is also worried that tracking China’s tech rise requires a type of deep cooperation with U.S. allies that the Trump administration has squandered, such as the global intelligence-sharing network called the “Five Eyes” alliance.
Those relationships are now under strain, he said, and key partners including the United Kingdom, the Netherlands, and France have gone public in saying they are reluctant to share intel with the U.S. “They feel like we may be politicizing the intel product and that is not good news for America,” Warner said.
Underlying his concerns about the technology competition with China in areas including AI and biotech is the U.S. ceding the global lead in standards setting. For decades, the U.S. shaped the rules for wireless networks, satellites, and internet infrastructure. That dominance help Americans lead global markets, Warner said, but now China is aggressively positioning itself as the international standards setter.
Warner described the U.S. role in international bodies as one of the “secret sauces” in the era of America’s dominance of the global economy and technology, allowing the U.S. to leverage innovations occurring around the globe, “even if it didn’t arise in America.”
Across technology domains, influencing standards and protocols is critical to not only maintaining a competitive edge but also establishing ethical boundaries. “Will it be us or the Chinese?” Warner said. “The Chinese come in with clearly a less humanist approach. It’s been effective in lots of domains. We see it on standards-setting bodies. China floods the zone with lots of engineers, almost buying off the votes. We’ve got to reengage for American business and government,” he said.
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