Overview
- Alphabet said on July 22 it raised 2026 capital spending guidance to $195 billion–$205 billion and reported $44.9 billion in quarterly capex with a first‑time quarterly negative free cash flow.
- Shares of Alphabet fell after the report and the sell‑off pulled down Amazon, Microsoft and Meta as markets punished higher spending even when revenue beat forecasts.
- Company filings and quarterly statements show capex already growing sharply across hyperscalers while cloud revenue remains strong, with Google Cloud up about 82%, Azure near 40%, and AWS in the high‑20s.
- Analysts now expect Amazon and Microsoft may lift their 2026 capex targets and say upcoming earnings this week will be the immediate test of investor tolerance for more AI infrastructure spending.
- Rising upfront bills for GPUs, custom chips, power and data centers are forcing firms to use debt and equity to fund builds and could lead to slower buybacks, higher borrowing costs, or underused capacity if demand softens.