Amazon, Meta and Microsoft capex plans face scrutiny after Alphabet sell-off

Amazon, Meta and Microsoft capex plans are under closer investor scrutiny after Alphabet lifted the top end of its 2026 capital spending forecast to $205 billion and its shares fell 7% the next day. Amazon, Meta and Microsoft also declined, according to CNBC, as the market questioned whether AI data-center spending will produce returns quickly enough to justify rising cash use and debt.

The reaction came despite stronger growth at Google Cloud. Alphabet’s cloud unit expanded 82% in the second quarter, its fastest pace since at least 2020, after growing 63% in the prior quarter, CNBC reported. The sell-off suggests investors are placing more weight on the cost of capacity than they did in recent quarters, when higher spending was often treated as evidence of demand.

Why are investors focused on hyperscaler capex?

Hyperscalers are large cloud and internet infrastructure companies that build data centers, buy processors and lease equipment at scale. Capital expenditure matters because it reduces near-term free cash flow, while the revenue from AI services and cloud workloads may arrive over a longer period and depends on customer demand staying strong.

Evercore ISI’s Mark Mahaney wrote Wednesday that Alphabet’s higher spending plan raises the likelihood that Amazon and Microsoft make similar moves, according to CNBC. Microsoft and Meta are due to report after Wednesday’s close, with Amazon scheduled to follow Thursday.

Microsoft said in April it expected $190 billion of capital expenditure and finance leases for the year, including $25 billion tied to higher component costs as AI chip demand tightens memory supply. Visible Alpha analysts expect $190.1 billion, CNBC reported. Cowen analyst Derrick Wood told CNBC that another increase, in light of Alphabet’s market reaction, would probably create selling pressure in Microsoft shares.

Amazon gave 2026 capex guidance of $200 billion in February and kept that view in April, when Chief Executive Andy Jassy told investors the company’s plan was largely unchanged. Visible Alpha consensus for Amazon rose by almost $2 billion to $207.4 billion after Alphabet’s results, according to CNBC.

Several analysts have said Amazon could lift its spending outlook as it puts more money into AI, custom chips, memory and its early satellite internet effort. Jake Dollarhide, chief executive of Longbow Asset Management, whose largest holding is Amazon, said by email that Amazon may find it harder to satisfy investors amid “growing AI fatigue” and questions about rising capex and borrowing by large technology companies.

Balance sheets are now part of the debate. Amazon’s long-term debt rose 81% to $119 billion between Dec. 31 and March 31. Alphabet’s long-term debt increased 111% to $98 billion in the first half of 2026, and CNBC reported that Alphabet posted negative free cash flow in the second quarter for the first time.

Wedbush analysts wrote Thursday that Alphabet’s results pointed to constrained capacity and a willingness to spend in response to demand. They said a possible Amazon capex increase would not be wholly negative, citing AWS growth and Amazon’s platform assets, including Bedrock, Alexa and logistics.

Amazon Web Services remains the largest cloud infrastructure provider, followed by Microsoft, while Google Cloud has been closing part of the gap. Google Cloud was 30% of AWS’s size in 2020 and nearly 50% in the first quarter of 2026, according to CNBC. AWS revenue rose 28% in the first quarter, and FactSet analysts expect almost 32% growth for the second quarter. Microsoft’s Azure and other cloud services grew 40% in the first quarter, with FactSet consensus at 39% for the second quarter.

Meta is in a different position because it lacks an established cloud infrastructure business. FactSet analysts expect Meta’s 2026 capex to reach $138.9 billion, while the company told investors in April the figure could rise to $145 billion. CNBC has reported that Meta is exploring sales of computing capacity to outside customers.

This story draws on original reporting from CNBC.