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Facebook's CEO Mark Zuckerberg (L) speaks with Microsoft's CEO Satya Nadella after posing for a family picture with guests who attend the "Tech for Good" Summit at the Elysee Palace in Paris, on May 23, 2018. Charles Platiau | AFP | Getty Images
Alphabet had long been Wall Street's favorite hyperscaler due to its expertise in converting high capital expenditures into revenue. But investors expressed displeasure with company's plans, announced on Wednesday along with second-quarter earnings, to boost its 2026 capex forecast, as the internet giant rushes to open new data centers for artificial intelligence. Shares of Google's parent slid 7% on Thursday, and Amazon , Meta and Microsoft all fell as well, underscoring increased scrutiny of infrastructure investments that are resulting in dwindling cash piles with uncertain returns. The three megacaps are set to report quarterly results this week. In recent quarters, investors cheered capital spending hikes, interpreting them as proof of healthy demand and a maturing revenue backlog. Alphabet received the best reception on Wall Street — the stock is up about 70% over the past year — because its cloud infrastructure business has been growing faster than rivals and its Gemini models and services have gained traction in a market dominated by OpenAI and Anthropic. But if last week's report is a guide, Google is no longer getting the benefit of the doubt. And Mark Mahaney, head of internet research at Evercore ISI, wrote in a note Wednesday that Alphabet's capex boost "increases the odds of similar behavior" from Amazon and Microsoft.
Microsoft and Meta will be next in testing investor appetite, when they report after the close on Wednesday. Amazon follows on Thursday. In April, Microsoft projected $190 billion worth of capex and finance leases for the year, including $25 billion from higher component prices, as AI chip demand eats up memory supply. "If they raise capex again, based on what we saw in the reaction of Google [last week], it's probably going to lead to selling pressure in the stock," Cowen analyst Derrick Wood told CNBC in an interview. Analysts polled by Visible Alpha expect $190.1 billion from Microsoft. Following Alphabet's report, the consensus for Amazon crept up almost $2 billion to $207.4 billion, according to Visible Alpha.
'Growing AI fatigue'
Amazon in February guided to $200 billion in capex for 2026, the highest among the group until Alphabet lifted the top end of its forecast to $205 billion. The company maintained that forecast in April, with CEO Andy Jassy telling investors at the time that its "plan is largely the same." Several analysts wrote in research notes earlier this month that they expect Amazon to lift its capex guide for the year, as the company boosts investments in AI, custom chips and other costly bets like its nascent satellite internet service, and given higher memory prices. Jake Dollarhide, CEO of Longbow Asset Management, whose top holding is Amazon, wrote in an email that the online retailer could struggle to impress investors "in this environment of growing AI fatigue, the sudden questioning of meteoric capex budget increases and Silicon Valley and the Mag 7 taking on noticeable levels of debt in order to fund the massive data center buildout." Amazon's long-term debt shot up 81% to $119 billion from Dec. 31 to March 31. Alphabet's rose 111% to $98 billion during the first six months of 2026, while the company, long viewed as a money-printing machine, turned cash flow negative in the second quarter for the first time.
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