Alphabet AI spending puts Amazon, Meta and Microsoft on watch
Alphabet raised its 2026 capex outlook as AI costs hit free cash flow, shifting investor focus to Amazon, Meta and Microsoft earnings.
By Dev Ramirez · Crypto Correspondent
· 3 min read
Alphabet AI spending is now the opening test for Big Tech earnings, after the Google parent told Wall Street it expects to spend more on artificial intelligence than it previously planned. For everyday investors, the key issue is no longer whether AI demand is real. It is whether the biggest tech companies can turn that demand into enough cash to justify the cost of building for it.
CNBC’s Investing Club said Alphabet began the megacap cloud earnings cycle this week, with Amazon, Meta Platforms and Microsoft due to report next week. Jeff Marks, the Investing Club’s portfolio director, said Friday that capital expenditure trends will be the top focus for investors. Capital expenditures, or capex, are long-term investments in physical and technical assets such as data centers, servers, chips and networking gear.
Why is Alphabet AI spending worrying investors?
Alphabet raised its 2026 capital spending forecast by $15 billion at the midpoint, to a range of $190 billion to $205 billion, according to CNBC’s Investing Club. The company also repeated that spending is expected to rise again in fiscal 2027.
That heavier outlay pushed Alphabet’s second-quarter free cash flow to negative $5.8 billion, CNBC’s Investing Club reported, marking the first negative quarterly free cash flow reading in the company’s history. Free cash flow is the cash a company has left after operating costs and capital spending. Investors watch it because it helps show how much room a company has to reinvest, pay down debt or return money to shareholders.
The spending update drew attention away from a strong cloud result. Google Cloud revenue rose 82% from a year earlier, according to CNBC’s Investing Club. Jim Cramer said he was uncomfortable with the scale of Alphabet’s announced capex, even with the cloud growth.
Alphabet shares fell 7% on Thursday after earnings and were down almost 8% over five trading days, CNBC’s Investing Club reported. Meta and Amazon also declined nearly 7% and 6%, respectively, for the week, while Microsoft was down more than 2% week to date.
What are investors watching at Meta, Amazon and Microsoft?
Meta and Microsoft are scheduled to report Wednesday evening, with Amazon expected after Thursday’s close, according to CNBC’s Investing Club. Meta may draw extra attention because it has been increasing spending on computing infrastructure for AI and has reportedly been preparing a public cloud business that could sell unused computing capacity to outside customers.
Last quarter, Meta raised its 2026 capex guidance to $125 billion to $145 billion, a $10 billion increase at the midpoint, citing higher costs for memory, chips and data center parts, CNBC’s Investing Club reported. Meta shares fell 9% after that report. Its free cash flow rose 20% and beat estimates last quarter, according to the same report.
Amazon faces a similar debate through Amazon Web Services, the largest cloud infrastructure provider. CNBC’s Investing Club said Google Cloud’s growth and backlog point to strong enterprise demand for AI computing, which could support continued AWS investment. Amazon previously kept its 2026 capex forecast at about $200 billion, and CNBC’s Investing Club said the company was projected in May to have negative free cash flow this year.
Microsoft will be judged on Azure and on its broader software business. CNBC’s Investing Club said Microsoft laid out about $190 billion in expected capital spending for calendar 2026 and has seen free cash flow come under pressure. The stock is down 20% this year, according to the report, while investors have also questioned whether AI could disrupt enterprise software demand.
This story draws on original reporting from CNBC.
