$650 Billion and Counting: What Big Tech’s AI Spending Says About the Market

Last Tuesday, Alphabet, Microsoft, Meta, and Amazon all released their quarterly earnings on the same day, with each reporting after the market closed. Every company beat revenue expectations. Still, the market did not respond in the same way across the board. That gap in investors’ reaction vs earnings performance reveals a lot about the current sentiment around AI.

The Numbers

Based on industry estimates referenced by Fortune and The Next Web, total capital expenditure for 2026 across the five major hyperscalers, Alphabet, Microsoft, Meta, Amazon, and Apple, is projected to land between $650 billion and $700 billion. CNBC reports this marks a more than 60% increase from the already record-breaking levels seen in 2025.

Here is how the four companies that reported on 29 April are planning to spend in 2026, according to their earnings guidance:

Amazon is set to spend around $200 billion in capex for the full year, according to CNBC. AWS posted 28% year-on-year revenue growth, reaching $37.6 billion in Q1, its fastest pace in 15 quarters, according to GotradE News.

Alphabet increased its 2026 capex outlook to between $180 billion and $190 billion, up from its earlier $175 to $185 billion range, CNBC notes. Google Cloud revenue surged 63% year-on-year to $20 billion in Q1, beating analyst expectations of $18.05 billion. Fortune also reports Alphabet’s enterprise cloud backlog climbed to $462 billion, nearly double the previous quarter, with more than half expected to convert into revenue within two years.

Microsoft projected $190 billion in full-year capex, with over $40 billion expected in Q4 alone, according to Fortune. Yahoo Finance reports Microsoft’s AI segment is now running at a $37 billion annual revenue rate, up 123% year-on-year. The company added that it expects to remain capacity constrained through the end of 2026.

Meta raised its 2026 capex forecast to between $125 billion and $145 billion, up from $115 to $135 billion, citing increased component costs and expanded data centre investments, according to its Q1 2026 Form 8-K filing. CNBC reports Meta’s revenue grew 33% year-on-year to $56.31 billion, its strongest quarterly growth since 2021.

How Markets Actually Reacted

The market response was not a simple sell-off or rally. Instead, investors clearly differentiated between companies already seeing tangible returns from AI spending and those still working toward it.

According to Motley Fool, Alphabet and Amazon came out ahead. Alphabet’s stock rose on the back of strong Google Cloud growth, while Amazon rebounded sharply. As of 1 May, both were up more than 20% and 16% year-to-date, respectively.

Meta, despite an initial after-hours dip following its increased capex guidance, still closed up 0.55% on 30 April. Microsoft stood out in a different way. Its stock is down 14% year-to-date, even after posting record earnings, reflecting investor concerns about how its heavy spending is translating into visible cloud returns.

The broader market backdrop also played a role. The Dow Jones Industrial Average climbed 790 points on 30 April, and the Nasdaq ended higher, suggesting investors viewed the overall earnings picture as positive.

Why the Divergence Matters

What investors are really distinguishing now is the difference between AI spending that delivers near-term, measurable results and spending that represents a longer-term strategic bet.

The Next Web highlighted that Meta’s AI investments are largely internal, focused on powering its own recommendation systems, advertising tools, and Llama models, rather than generating external revenue like a cloud business. External cloud growth signals revenue, while internal infrastructure is treated as cost. Following the earnings release, CNBC reported that JPMorgan downgraded Meta to neutral, pointing to the difficulty of generating returns without the enterprise integrations and chip advantages that hyperscalers currently have.

Microsoft faces a different challenge. According to Motley Fool, it is lagging behind Alphabet and Amazon in developing custom AI chips for training and inference, an area that is becoming critical for cost efficiency and performance. Both Alphabet and Amazon have made notable progress with proprietary silicon, reducing reliance on Nvidia and improving economics at scale.

The Question the Market Is Now Asking

Fortune reports that analysts are increasingly pressing executives for clear timelines on when AI investments will start delivering returns. The market is now sharply separating companies that can back up their spending with data from those that cannot.

Through much of 2024 and 2025, simply announcing large AI capex plans was enough to support premium valuations. That dynamic has shifted. Investors are now looking for proof, whether that is faster cloud growth, improving margins on AI products, or a credible short-term monetisation strategy. Alphabet has demonstrated that most clearly so far in 2026, with Amazon close behind. Microsoft and Meta are still in the build-out phase.

The Bigger Picture

Looking ahead, CNBC reports that analysts at Evercore and Bank of America expect total Big Tech capex to surpass $1 trillion in 2027, following updated guidance from recent earnings calls. Alphabet’s CFO has already indicated that 2027 spending will rise significantly compared to 2026.

This level of investment extends beyond just the tech giants. It has direct implications for semiconductor demand, data centre development, energy infrastructure, and cooling technologies. CNBC also notes that the four largest US internet companies generated around $200 billion in free cash flow in 2025, capital that is now being heavily reinvested into AI infrastructure.

The key question is whether enterprise demand can scale quickly enough to justify $700 billion in spending in a single year, and potentially $1 trillion the next. Based on last week’s market reactions, the answer is not straightforward. It depends heavily on which company you are looking at.

Disclaimer: The views expressed in this article are my own and do not represent those of my employer or any affiliated organisation. This content is for informational purposes only and should not be considered financial or investment advice.

Sources: CNBC, Meta Q1 2026 Earnings; CNBC, Alphabet Q1 2026 Earnings; CNBC, Tech AI Spending Approaches $700 Billion; Fortune, Microsoft, Meta and Google AI Capex Spending; The Next Web, Q1 2026 Big Tech Earnings; Yahoo Finance, Big Tech AI Capex; GotradE News, Big Tech Q1 2026 Earnings; Motley Fool, Magnificent Seven Q1 2026 Earnings; Motley Fool, Microsoft Falling Behind Alphabet and Amazon; Meta Platforms Form 8-K Q1 2026 (SEC).