Alphabet raised its 2026 capital expenditure forecast and its shares slid 7%, while Amazon, Meta and Microsoft all fell as well. All three report quarterly results this week, and analysts expect them to lift their own AI spending plans. Debt is climbing and free cash flow is turning negative across the group.
Investors punished Alphabet for spending more on artificial intelligence: shares of Google's parent slid 7% on Thursday after the company announced plans on Wednesday, alongside second-quarter earnings, to boost its 2026 capital expenditure forecast. Amazon, Meta and Microsoft all fell as well, and the three megacaps are set to report quarterly results this week.
Alphabet had long been Wall Street's favorite hyperscaler because of its expertise in converting high capital expenditures into revenue. The stock is up about 70% over the past year, helped by cloud infrastructure growing faster than rivals and by traction for its Gemini models. But if last week's report is a guide, Google is no longer getting the benefit of the doubt.
Microsoft and Meta report Wednesday, Amazon Thursday
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 report after the close on Wednesday, with Amazon following 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. Analysts polled by Visible Alpha expect $190.1 billion from the software company. Following Alphabet's report, the consensus for Amazon crept up almost $2 billion to $207.4 billion, according to the same firm.
Debt climbs as cash flow turns negative
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. Meta, the lone hyperscaler without an established cloud business, is expected to record capex this year of $138.9 billion and told investors in April that the number could reach $145 billion.
Borrowing has climbed to fund the 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. Alphabet, long viewed as a money-printing machine, also turned cash flow negative in the second quarter for the first time.
The pattern extends across the group. Amazon's free cash flow flipped into the red in the first quarter, and analysts surveyed by FactSet forecast it will stay there for the full year. Those analysts also expect Microsoft's free cash flow to go negative in the fourth quarter for the first time since at least 2001.
Source: CNBC
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