Microsoft, Alphabet, Meta and Amazon announced their earnings for the second quarter of 2026 this week and while some results were better than others, one metric can recently be relied on to show a constant upward trend: capital expenditure. As tech giants continue to invest heavily in AI, cap ex spending between the four companies is expected to hit $760 billion this year. For comparison, this number stood at only $413 billion in 2025.
All four hyperscalers signaled that they’ll continue to spend more on the AI capabilities of their data centers, chips and networking equipment. However, not all of the increase in spending is going into new equipment as the rising price of chips is also causing higher spending. In the case of Microsoft, for example, this figure was as high as an estimated $25 billion in 2026.
Amazon and Alphabet once again raised their cap ex spending forecast for 2026, as did Meta, if only on the lower range of the estimate. Microsoft this time stuck with its April projection of $190 billion.
Amazon, which reported its financials yesterday, already has something to show for the massive amounts of money it is pumping into AI. The revenue of Amazon Web Services – a growth motor of the company for a long time – was up 37 percent year-over-year, the fastest pace in 18 quarters. At the same time, the AI business within Web Services as well as chips showed triple-digit growth, amounting to an annualized revenue of $25 billion. Microsoft's AI business was meanwhile up 123 percent year-over-year, while Alphabet saw a growth of 82 percent in its cloud business. All three companies gained on their top and bottom lines. Amazon, despite announcing higher capital spending, still had its stock price rise upon the release of the new quarterly figures, while investors reacted negatively to Alphabet's announcement of even more investments. Microsoft also saw its stock price soar, but had left cap ex guidance the same since April.
Meta, on the other hand, saw profits decline on legal expenses and severance costs in Q2. Revenue was still up. The company had in April said it would see capital expenditures between $125 billion and $145 billion this year. In its July statement, it raised the floor of the range to $130 billion. Shares also fell.
Some of the cost of depreciation associated with these large capital expenditures will not take a bite out of profits until next year. While some investors are spooked by the scale of spending, the leaders of the companies involved are adamant that it’s the right way to go. “AI is a once-in-a-lifetime opportunity where the current growth is unprecedented and the future growth even bigger,” Amazon CEO Andy Jassy recently wrote in his annual letter to shareholders. “We’re not going to be conservative in how we play this – we’re investing to be the meaningful leader, and our future business, operating income, and FCF (free cash flow) will be much larger because of it.”
