Amazon, Meta and Microsoft capex plans face scrutiny after Alphabet drop
Alphabet’s higher 2026 spending forecast hit tech stocks as investors await Amazon, Meta and Microsoft earnings this week.
By Maya Okafor · Markets Writer
· 4 min read
Amazon, Meta and Microsoft capex plans are under a brighter spotlight this week after Alphabet’s higher 2026 spending forecast triggered a sell-off in major tech stocks. For everyday investors, the issue is straightforward: the biggest AI companies are spending heavily now, while the payoff still depends on future cloud and AI demand.
Alphabet said with its second-quarter earnings on Wednesday that it was lifting its 2026 capital expenditure outlook as it builds more data centers for artificial intelligence, CNBC reported. Capital expenditure, or capex, means money spent on long-term assets such as data centers, servers and chips.
Alphabet shares fell 7% on Thursday after the report, while Amazon, Meta and Microsoft also declined, according to CNBC. The reaction suggested investors are becoming less willing to treat every AI spending increase as good news.
Microsoft and Meta are scheduled to report quarterly results after the market closes Wednesday, with Amazon due Thursday, CNBC reported. The three companies are often grouped with Alphabet as hyperscalers, a term for tech companies that operate enormous cloud computing networks and can add capacity at very large scale.
Why are investors worried about AI capex?
Investors are watching whether higher spending starts to pressure free cash flow, which is the cash a company has left after running the business and paying for capital projects. Heavy AI spending can support future revenue if customers keep buying cloud and AI services, but it can also reduce cash generation before those returns show up.
Mark Mahaney, head of internet research at Evercore ISI, wrote Wednesday that Alphabet’s capex increase raises the chance that Amazon and Microsoft make similar moves, CNBC reported. Cowen analyst Derrick Wood told CNBC that if Microsoft raises capex again, the reaction to Google’s report suggests the stock could face selling pressure.
Microsoft said in April that it expected $190 billion in capex and finance leases for the year, including $25 billion tied to higher component prices as AI chip demand tightens memory supply. Analysts polled by Visible Alpha expect Microsoft to report $190.1 billion, according to CNBC.
Amazon guided in February to $200 billion of 2026 capex, then kept that outlook in April, when CEO Andy Jassy told investors the plan was largely unchanged, CNBC reported. Visible Alpha consensus for Amazon moved up by almost $2 billion to $207.4 billion after Alphabet’s report.
Meta, which does not yet have an established cloud business like the others, is expected to record $138.9 billion of capex this year, according to FactSet estimates cited by CNBC. Meta told investors in April that the figure could reach $145 billion, and CNBC reported the company is exploring selling computing power to outside customers.
Cloud growth is still the bull case
The spending debate is happening because demand for cloud computing remains strong. Alphabet’s cloud business grew 82% in the second quarter after rising 63% in the prior period, CNBC reported. Evercore’s Mahaney wrote that cloud demand appears strong, though he said it would be difficult for rivals to match Google’s growth rate for the quarter.
Amazon Web Services remains the largest cloud infrastructure provider, with Microsoft in second place, CNBC reported. AWS revenue rose 28% in the first quarter, and analysts surveyed by FactSet expect nearly 32% growth for the second quarter. Microsoft’s Azure and other cloud services grew 40% in the first quarter, with FactSet consensus calling for 39% in the second quarter.
The cash picture is getting more complicated. Amazon’s long-term debt rose 81% to $119 billion from Dec. 31 to March 31, while Alphabet’s debt climbed 111% to $98 billion in the first half of 2026, according to CNBC. Alphabet also turned free-cash-flow negative in the second quarter for the first time.
Analysts surveyed by FactSet expect Microsoft’s free cash flow to turn negative in the fourth quarter for the first time since at least 2001, CNBC reported. Amazon’s free cash flow moved into negative territory in the first quarter, and FactSet analysts expect it to stay negative for the full year.
Tiffany Wade, a fund manager at Columbia Threadneedle, told CNBC she believes investors will need patience with these companies because they could benefit from AI over the medium and longer term. She also said Alphabet’s use of outside vendors for extra computing capacity was likely the right decision because the company would not want to turn away customers due to capacity limits.
This story draws on original reporting from CNBC.
