Microsoft, Meta And Google Just Silenced AI Spending Critics In One Earnings Night As Big Tech Capex Swells To $725B

• Strong cloud results allayed fears around higher AI spending.
• Google has hiked its 2026 capex projection by $5 billion, while Meta raised it by $10 billion.
• Google Cloud sales rose by a record 63%, sending the company’s shares over 6% higher in post-market hours.

Alphabet, Inc. and Meta Platforms, Inc. on Wednesday raised their capital spending outlooks, with four of the biggest tech companies now projecting combined 2026 spending of up to $725 billion – bigger than the GDP of countries like Switzerland or Turkey.

Alphabet, Meta, Amazon, and Microsoft are racing to build out new data centers to meet surging demand for AI compute, insisting the technology is a once-in-a-generation opportunity – and that the unprecedented spending is both justified and poised to pay off.  

Moreover, strong cloud results across the board have, for now, eased concerns around overspending. The three leading hyperscalers – Amazon Web Services, Microsoft Azure, and Google Cloud – have posted higher sequential growth rates, with Google Cloud revenue surging 63.4% year over year, a record pace.

*Microsoft said last year its capex for the fiscal year 2026, which ends in June, will be higher than the $88.2 billion it spent in FY25. 
**Forecast is for calendar year 2026.

“We are seeing unprecedented internal and external demand for AI compute resources. The investments we are making in AI is delivering strong growth as evidenced by the record revenue and backlog growth in Google Cloud and strong performance in Google Services. Looking ahead, these strong results reinforce our conviction to invest the capital required to continue to capture the AI opportunity,” Alphabet CFO Anat Ashkenazi said on the company’s analyst call.

She said the company’s capex next year will “significantly increase compared to 2026.”

Meta and Microsoft said spending would be higher this year, in part because of surging component prices, likely for memory chips.

“For calendar year 2026, we expect to invest roughly $190 billion in capital expenditures, which includes approximately $25 billion from the impact of higher component pricing,” Microsoft CFO Amy Hood said on the earnings call.

Meta CFO Susan Li said, the capex increase “reflects our expectations for higher component pricing this year and to a lesser extent, additional data center costs to support future year capacity. 

“The ‘AI capex is speculative’ narrative is dead,” The Futurum Group CEO Daniel Newman said in an X post. "The companies investing in AI infrastructure today are buying the most valuable real estate of the next decade and tonight they showed exactly why." 

Alphabet’s results were comparatively strong, and the stock rose 6.4% in overnight trading following the report. 

Pivotal Research raised its price target on GOOGL to $470 from $420 (34% upside from the stock’s last close) and maintained a ‘Buy’ rating. Alphabet reported a "much stronger-than-expected" Q1, including a fifth straight quarter of accelerating search revenue growth of 19%, the research firm said in an investor note, adding that they offset concerns around the higher capex.

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