The intensive release of tech giants' earnings reports highlights a surge in AI-related spending, with capital expenditures by hyperscale tech giants projected to reach $725 billion by 2026.
According to the Tong Finance app, six of the seven tech giants in the U.S. stock market, excluding one, have released their Q1 earnings reports and future outlooks. These largest technology companies, which are making the most significant investments in artificial intelligence (AI), sent the latest signal on Thursday that they are far from stopping their ambitious plans to increase investment in AI computing infrastructure, aiming to seize the unprecedented 'AI moment.'$NVIDIA (NVDA.US)$The parent company of Facebook, Meta Platforms, and the parent company of Google, Alphabet (GOOGL), both announced their quarterly results and future outlooks early Thursday morning Beijing time. Prior to these announcements, Wall Street analysts unanimously agreed that the most crucial figures in the earnings reports of the four hyperscale cloud vendors would be their estimated AI capital expenditures. The same message was conveyed across the reports released simultaneously by these four tech giants: the AI spending race is far from over, with combined capital expenditures projected to approach $725 billion by 2026. The tech giants prefer to endure pressure on cash flow and profit margins rather than fall behind in the computing arms race.
$Microsoft (MSFT.US)$、$Amazon (AMZN.US)$, Facebook's parent company$Meta Platforms (META.US)$There is no sign of any slowdown in AI-related capital expenditure; instead, projections continue to rise significantly. Meta raised its 2026 CapEx guidance to between $125 billion and $145 billion. Alphabet increased its 2026 CapEx to between $180 billion and $190 billion and indicated that it would increase even further in 2027. Microsoft announced an ambitious AI infrastructure plan for the 2026 calendar year, with approximately $190 billion in AI CapEx, around $25 billion of which is related to component price increases. Amazon maintained its previously announced capital expenditure plan, close to $200 billion. Adding up these figures, not including the newly announced multi-billion-dollar capital expenditure plan by another company, the total capital expenditure of these four tech giants in 2026 approaches $725 billion.
Overall, these tech giants aim to convince more investors that their massive investments in artificial intelligence are about to yield record-breaking returns. Therefore, their increasingly robust AI capital expenditures serve as a solid positive factor for the global stock market rally driven by the narrative of AI computing power and the broader bullish trend in AI infrastructure.
Before entering this quarter, high-end market estimates suggested that the group's AI spending for this year would be around $670 billion. As of Wednesday evening following the earnings announcements, this figure had risen to nearly $725 billion.
A significant portion of these investments is being used to procure high-performance chips from leading companies in the AI computing supply chain, such as NVIDIA (NVDA.US). Combined with NVIDIA’s quarterly earnings released in late February and recent signals from other hyperscale chipmakers like Taiwan Semiconductor, there is little indication that this quarter will see any of these hyperscale cloud vendors signaling a reduction in investment.$Tesla (TSLA.US)$In addition, tight supplies of high-performance CPUs, DRAM/NAND memory chips, and other low-power chips focused on data centers have led some long-established tech companies, such as Intel (INTC.US), to become leaders in the latest stock market rally. Seagate Technology (STX.US), one of the dominant players in HDDs, saw its share price jump by as much as 11% after releasing its quarterly earnings on Wednesday, serving as the latest example of the increasingly feverish AI-driven bull market narrative.
Earnings reports from the four giants convey the same message: the 'AI spending war' is far from over.
Meta was the first to announce its 2026 plan, raising its capital expenditure forecast to between $125 billion and $145 billion, with both the lower and upper limits increased by $10 billion. In its earnings report, Meta explained that the upward revision was due to anticipated higher prices for key components of AI computing infrastructure, such as HBM and eSSD storage chips, and to a lesser extent, rising data center construction costs to support capacity expansion in the coming year. Following the release of this report, Meta’s stock price dropped by approximately 6%.
During the earnings call, Alphabet's management informed investors that the company now expects its full-year capital expenditure to be between $180 billion and $190 billion, with both ends of the range significantly increased by $5 billion. Looking ahead to 2027, the company told investors that capital expenditures are expected to increase 'significantly.' Alphabet’s shares rose 7% after the earnings announcement, which showed that revenue from Google Cloud grew significantly more than expected.
On Wednesday evening Eastern Time, Microsoft informed investors during its earnings call that it expects its capital expenditures for the calendar year 2026 to reach $190 billion, including a $25 billion impact from rising component prices, similar to the forecast provided by Meta. The company stated: 'Given stronger demand signals for AI computing resources and increasing usage of AI-related products, along with efficiency improvements we have already implemented across our platform, we remain confident in the returns from these investments.' As of January, Microsoft’s annualized AI capital expenditure was close to $150 billion.
In January, Amazon stated that it expects its 2026 capital expenditures to approach $200 billion. During the Q1 earnings call, the company reiterated to investors that its capital expenditure plan remains largely unchanged.
These investments are largely directed toward purchasing high-performance chips from industry leaders in the AI computing supply chain, such as NVIDIA (NVDA.US). Combining NVIDIA's quarterly earnings disclosed in late February and additional signals recently issued by other large-scale chip manufacturers like Taiwan Semiconductor, there is no evidence suggesting any of these hyperscale cloud providers will signal a pullback in investment during this quarter.$Taiwan Semiconductor (TSM.US)$Moreover, tight supplies of high-performance CPUs, DRAM/NAND storage chips, and other low-power chips tailored for data centers have allowed some legacy tech companies, such as Intel (INTC.US), to emerge as leaders in the latest stock market surge. On Wednesday, following the release of its quarterly earnings, Seagate Technology (STX.US), a dominant player in the HDD market, experienced an 11% spike in its share price, providing yet another vivid illustration of the intensifying AI-driven bull market narrative.
Additionally, shortages of high-performance CPUs at the data center level, along with DRAM/NAND memory chips and other low-power chips focused on data centers, have propelled some formerly well-known tech companies, such as Intel (INTC.US), into leadership positions in the latest stock market rally. One of the dominant HDD manufacturers, Seagate Technology (STX.US), witnessed a significant 11% surge in its stock price following the release of its quarterly earnings on Wednesday, offering the latest compelling example of the increasingly frenzied AI bull market narrative.$SanDisk (SNDK.US)$、$Western Digital (WDC.US)$Furthermore, supply constraints for high-performance CPUs, DRAM/NAND memory chips, and other low-power chips designed for data centers have enabled some older tech firms, such as Intel (INTC.US), to lead the latest stock market rally. For instance, Seagate Technology (STX.US), a major player in the HDD sector, saw its shares soar by 11% after announcing its quarterly earnings on Wednesday, underscoring the growing fervor of the AI-driven bull market narrative.
However, reports over the past week indicate that at least two of these companies—Meta and Microsoft—are seeking to streamline their teams. These investments are not without cost, and after years of generating substantial free cash flow, large technology companies are increasingly tapping into debt markets to finance these ventures.
In recent months, the contours of AI-related trading themes appear prone to rapid shifts. Market sentiment towards software stocks has waned, while investor enthusiasm for new AI models from startups like OpenAI and Anthropic seems to fluctuate rapidly.
Nevertheless, for the largest technology behemoths operating on a global scale, all signals continue to point to AI as an opportunity presenting only one major risk: underinvestment.
Although individual earnings reports vary in tone, an unprecedented wave of capital expenditure (CapEx) continues to fuel the AI bull market.
The common signal from the latest earnings reports of the four major cloud giants is clear: even though individual stock performances diverge due to ROI, profit margin, or free cash flow pressures, total AI capital expenditure shows no signs of cooling down and is instead being revised upward.
For instance, Microsoft's earnings report was strong but not an impeccable celebration of AI achievements—investors acknowledged the increasing demand for computational resources around AI, yet they began demanding proof from management that massive AI CapEx could consistently translate into stronger revenue growth for cloud computing and software businesses, overall profit margins, and robust cash flow expansion. Nonetheless, Microsoft’s report confirmed the explosive expansion of AI computing needs (with $190 billion allocated for data center expansion and construction), Azure’s near-40% high growth rate, a solid foundation in enterprise software, and continued robust support for orders across the AI computing supply chain, including AI GPUs, AI ASICs, data center CPUs, and HBM.
For the AI computing supply chain, this represents a strengthening at the level of order visibility: GPUs/ASICs, HBM/DRAM/NAND, HDDs, PCB/CCL/MLCC, optical modules, switches, copper cables, data center power equipment, liquid cooling systems, and data center engineering and power infrastructure will all benefit. Particularly, as bottlenecks have expanded beyond GPUs to memory, storage, PCBs, networking, and power, the ongoing increase in CapEx by industry giants implies upstream hardware suppliers will maintain strong pricing power, high capacity utilization, and clear order visibility. Alphabet's cloud revenue grew 63% year-over-year, with a backlog nearing $462 billion, while Microsoft Azure grew approximately 40%, with annualized AI-related revenue exceeding $37 billion—these figures demonstrate that AI investments are not merely停留在“narrative,” but are already materializing in cloud-related revenue generation, enterprise AI demand, and computing power consumption.
There is no doubt that the AI CapEx boom continues to serve as the main engine driving the bull market. However, the market is becoming increasingly discerning about “who can turn investments into actual revenue, profits, or even cash flow.” Alphabet rose due to strong cloud growth and high AI demand visibility, while Meta fell despite raising CapEx due to uncertainty about return on investment cycles. This suggests that the market is not indiscriminately rewarding spending but is instead identifying winners with clearer ROI. In conclusion, regardless of how individual earnings reports differ, the collective stance of the four major cloud giants—preferring to invest more rather than less—remains a strong support pillar for the AI computing supply chain and the AI-driven narrative fueling the current global stock market bull run.
Editor/joryn