Overview
- Last week Alphabet raised its 2026 capital expenditure outlook to $195–$205 billion and reported negative free cash flow after spending roughly $45 billion in the quarter, a move that intensified investor concern over returns on AI investment.
- Alphabet disclosed $811 billion in purchase commitments and long‑term contracts in its 10‑Q, a figure tied mainly to chips, data‑center construction and energy deals that extend obligations through the decade.
- Court testimony revealed Microsoft has spent more than $100 billion on its OpenAI partnership and related data‑center and hosting costs, underlining how hyperscaler deals and cloud capacity have driven massive outlays.
- Markets punished some recent reports—Alphabet and Tesla shares fell after their results—so Microsoft’s upcoming earnings on July 29 are seen as the pivotal moment to show whether Azure growth and Copilot adoption offset rising AI capex.
- Analysts are split: some, including Morgan Stanley, remain bullish that expanded datacenter footprints will unlock durable revenue while many investors are selling into capex uncertainty, leaving broader market direction sensitive to earnings and near‑term economic data.