How much Google, Meta, Amazon, and Microsoft are spending on AI

The tech internet giants have weathered earnings season and delivered a consistent message to Wall Street: Investments in artificial intelligence will only increase.

alphabet, meta, microsoft and Amazon Each company has raised its guidance for capital spending, which it expects will total more than $380 billion this year.

Microsoft’s forecast was for fiscal year 2026, which ends in June.

Companies are rushing to build out infrastructure, arguing that there is virtually unlimited demand for AI services.

Meanwhile, a growing number of skeptics are voicing concerns that these historic spending levels are fueling a bubble, and questioning whether there will be enough energy and resources to make AI’s grand promises a reality.

This week’s spending forecasts were big, but they look mediocre compared to OpenAI, which recently announced nearly $1 trillion worth of infrastructure deals with the following partners: Nvidia, oracle and broadcom.

Investor reaction to the megacap report was mixed.

Amazon, whose stock price soared after the company posted higher profits and sales, said it would invest about $125 billion in capital expenditures this year, up from its earlier forecast of $118 billion.

“We continue to make significant investments, particularly in the AI ​​space,” Finance Director Brian Olsavsky said on the earnings call, adding that number will increase even further in 2026. “We believe this is a significant opportunity with the potential for a significant return on invested capital over the long term.”

Investors also cheered Alphabet, which reported higher profits and said it raised its capital spending outlook for this year to $91 billion to $93 billion from a previous range of $75 billion to $85 billion. Shares rose 2.5% on Thursday.

But even though the software company’s results beat expectations, Microsoft shares fell about 3%.

Chief Financial Officer Amy Hood said on an earnings call that the company, which had previously said growth would slow, will see capital spending growth accelerate in fiscal 2026, which begins in July. Capital spending rose 45% last year to $64.55 billion, suggesting a minimum of around $94 billion by 2026. This number is significantly higher if leases are included.

Meta’s stock took an even bigger hit, plummeting 11% on Thursday, its biggest decline in three years despite strong overall performance. The company has narrowed its capital investment outlook to $70 billion to $72 billion from the previous estimate of $66 billion to $72 billion.

Unlike Amazon, Microsoft, and Google, Meta has no cloud services and no clear return story associated with its AI investments.

Meta says the benefits of AI will come elsewhere: boosting the performance of its core digital advertising business through improved targeting.

Still, Oppenheimer analysts downgraded the stock from buy to the equivalent of hold, citing an “untapped revenue opportunity” the company calls superintelligence, and said investors will struggle with “aggressive earnings growth offset by high spending.”

Google, by contrast, has “predictable revenues,” the analysts wrote.

Meta CEO Mark Zuckerberg announced the creation of the company’s superintelligence lab in June, saying it would be led by some of the company’s most expensive hires, including former Scale AI CEO Alexander Wang and former GitHub CEO Nat Friedman.

The lab would house the company’s various teams working on fundamental models, Zuckerberg wrote in a memo at the time.

“With this influx of new talent and parallel approaches to model development, I’m optimistic that we can deliver on the promise of delivering personal superintelligence to everyone,” Zuckerberg said.

But Oppenheimer analysts said this is an approach that “reflects” the company’s Metaverse spending in 2021 and 2022, when Zuckerberg declared the platform to be the future of computing.

Meta still spends billions of dollars a quarter on augmented reality investments. The company said in its earnings report that its Reality Labs division had revenue of $470 million and a loss of $4.4 billion in the quarter.

For other hyperscalers, their AI investments are primarily tied to their cloud infrastructure business, even though they use AI across the enterprise.

In the cloud computing space, Amazon Web Services is still larger than Microsoft Azure and Google Cloud, but its growth has been slower than its competitors.

AWS reported a 20% increase in third-quarter revenue to $33 billion. Microsoft said Azure revenue increased 40%, while Google’s cloud revenue rose 34% to $15.15 billion.

Cantor analysts said that clouds with “Microsoft-like extensive service stacks” stand to benefit from this “advanced phase of building AI infrastructure.”

They recommend buying the stock, but think there is reason to be concerned about the spending forecast. Analysts said total capital spending, including capital leases, is expected to reach $140 billion this year, up 58% from a year ago and three times as much as in 2024.

The numbers “positively reflect strong demand, but concerns remain as there is no end in sight,” the analysts wrote.

Note: Meta capex does not necessarily lead to ROI