Despite market concerns about "AI ( artificial intelligence) " Despite the emergence of a "bubble," several US tech giants continue to steadily increase capital expenditures.
This week, Google, Meta, and Microsoft, three of the "Big Seven" tech stocks on the US stock market, saw gains. Amazon And Apple Companies are releasing their quarterly earnings reports one after another. Among them, the three major cloud giants, Google, Microsoft , and Amazon , as well as Meta, have all explicitly stated that they will increase capital expenditures and predict that this trend will continue into next year.
Among the four giants, Microsoft 's capital expenditures for the first fiscal quarter of 2026 (the three months starting from July 1 this year) reached a staggering $34.9 billion; Meta raised its minimum full-year capital expenditure forecast by $4 billion, expecting full-year capital expenditures to reach between $70 billion and $72 billion; Google also raised its forecast for the second time this year, predicting full-year capital expenditures to be between $91 billion and $93 billion; while Amazon expects its full-year expenditures for 2025 to reach $125 billion.
Meanwhile, Microsoft indicated that it expects capital expenditure growth in fiscal year 2026 to be higher than in fiscal year 2025; Meta, Google, and Amazon also emphasized that capital expenditure will continue to grow next year. Anat Ashkenazi, CFO of Google's parent company Alphabet, went even further, stating that the company expects its capital expenditure in 2026 to "increase significantly."
In addition, Microsoft Chairman and CEO Satya Nadella stated that due to the enormous demand for the company's cloud services, Microsoft will increase its overall AI computing power by more than 80% this year and plans to expand its data centers over the next two years. The overall size has doubled. Amazon CEO Andy Jassy also mentioned that Amazon's data center capacity has doubled since 2022 and is expected to double again by the end of 2027.
Meta's relentless spending has raised market concerns, prompting Microsoft to revise its previous forecasts.
Although tech giants are increasing their investment in AI, the market response has been mixed.
Following the release of its financial report, Meta (Nasdaq: META) shares plunged 11% the following day, marking its biggest single-day drop since October 2022, closing at $666.47 per share, with a total market capitalization of $1.67 trillion, wiping out $220 billion in a single day.
Regarding the company's heavy investment in AI, Zuckerberg explained in the earnings call that the computing power required for Meta's AI projects continues to grow, leading to increased spending on data centers and cloud services: "This means that making significant investments in this area is likely to yield substantial profits in the long run."
Zuckerberg also defended the company, saying, "We are still in the early stages of investment, but I think we have already seen AI payback in our core business. This gives us more confidence to increase our investment and ensure that we invest enough."
However, analysis points out that unlike Microsoft, Google, and Amazon, Meta is not a cloud service provider that directly faces external customers, and its high capital expenditures are at greater risk of not being fully recouped.
Angelo Zino, an analyst at research firm CFRA Research, said that Meta cannot reap the benefits of its AI investments in the short term: "Meta's spending levels are exceeding what Wall Street wants to see, so Wall Street is now unhappy with them."
Meanwhile, the three cloud giants all saw accelerated growth in their cloud businesses in the third quarter: Amazon AWS's revenue reached $33.006 billion, a 20% year-over-year increase, marking its fastest growth since 2022; Microsoft Azure's revenue grew by 40% year-over-year, though the specific amount was not disclosed, with total unfulfilled cloud contracts (RPOs) valued at $392 billion; and Google Cloud's revenue grew by 34% to $15.157 billion, with a backlog of orders reaching $155 billion.
However, Microsoft's (Nasdaq: MSFT) stock price also fell after the earnings report was released, closing down 2.90% the following day at $525.82 per share, with a total market capitalization of $3.91 trillion.
During the earnings call in July, Microsoft CFO Amy Hood stated that she expected capital expenditure growth in fiscal year 2026 to be lower than in fiscal year 2025. However, three months later, facing the still unresolved supply and demand issues, Microsoft revised its forecast.
When an analyst asked if the company was worried about an AI bubble, Hood responded that even with the billions of dollars Microsoft has invested in recent quarters, it still cannot meet customer demand for AI and other services: "I thought we could catch up, but we haven't. Demand is growing, and not just in one area, but in multiple areas simultaneously."
Google offers a clear path to monetizing AI, while Amazon demonstrates its strength in the cloud business.
On the other hand, Google and Amazon's financial reports have gained market recognition as they have demonstrated the potential for AI to generate revenue returns while increasing investment.
The day after the earnings report was released, Google (Nasdaq: GOOGL) shares rose 2.45% to close at $281.90 per share, with a total market capitalization of $3.41 trillion.
In addition to its cloud business, Google also emphasized that advancements in AI have helped improve the company's search business. According to reports, as of the end of the third quarter, AI Mode, an AI product embedded in the Google search engine, had 75 million daily active users in the United States, and search queries under this mode doubled in the third quarter. At the same time, the company began testing advertising features in AI Mode.
Thomas Monteiro, senior analyst at financial website Investing.com, pointed out that Google Cloud's third-quarter revenue exceeded the market's highest expectations: "In today's competitive environment, it is impressive that Google has achieved such results without hurting profit margins. What is even more interesting is that the company's capital expenditures have not put pressure on profit margins as many had expected, making the company's prospects still optimistic."
Zino also pointed out that Google's parent company, Alphabet, "offers the clearest path to monetizing AI in many ways."
Meanwhile, Amazon's accelerated growth in its cloud business has reassured investors who were worried about competitors taking away its market share. Following the earnings release, Amazon's stock price (Nasdaq: AMZN) surged more than 13% in after-hours trading on October 30.
During the conference call, Jassy stated that due to Amazon's limited production capacity, customers are rapidly snapping up its cloud computing resources. Regarding AI services: "Currently, for the industry as a whole, the bottleneck may be electricity. I think at some point in the future, the bottleneck may shift to chips. However, we are significantly increasing production capacity, and while maintaining this capacity increase, we are also able to convert it into revenue."
S&P Global Melissa Otto, an analyst at S&P Global, said the strong performance of Amazon's cloud and core retail businesses has reassured investors who were worried that the company would spend too much money on the so-called "AI bubble": "We are seeing plenty of signs that AWS is performing exceptionally well. In my opinion, Amazon is not chasing the bubble, but is a company that is operating at full capacity."
(Source: The Paper)
