Big Tech’s Spending Spree Is Testing Wall Street’s Patience Again
Wall Street’s love affair with Big Tech is starting to show its cracks. AlphabetGOOGL, MicrosoftMSFT, and MetaMETA delivered their quarterly reports yesterday — though not every investor walked away happy. While Alphabet shares jumped 7% after hours, Meta’s and Microsoft’s stock tumbled more than 7.4% and 3.7% respectively.
- Alphabet hit a record $102.3B in revenue, while Microsoft’s revenue climbed 18%, with Azure growing ~40% as CEO Satya Nadella said demand is outpacing capacity.
- However, Meta’s story turned sour despite beating revenue estimates at $51.24B, as a tax charge hammered earnings per share to just $1.05, versus the anticipated $6.72.
AI spendathon: Meta CFO Susan Li cautioned that 2026 capital expenditures will be “notably larger” than the ~$72B expected for 2025, with total expenses rising at a “significantly faster percentage rate” due to soaring infrastructure and cloud costs. Collectively, Alphabet, Microsoft, and Meta are projected to spend over $430B annually on AI infrastructure by 2027, with BNP Paribas analysts suggesting it could climb as high as $500B as they vie for AI dominance. The market’s patience for such massive outlays remains intact (for now) — but investors are increasingly demanding real returns beyond headline revenue growth.