Microsoft, Google, Meta, and Amazon release their earnings reports this week, and the market is focused on just one number.

Microsoft, Google, Meta, and Amazon release their earnings reports this week, and the market is focused on just one number.

```

This week, as tech giants release their earnings reports one after another, Wall Street’s gaze will pierce through traditional metrics like revenue and profit, focusing on a figure that better reveals the future: capital expenditure.

Microsoft, Alphabet, and Meta will announce their quarterly earnings this Wednesday, followed by Amazon and Apple on Thursday. Although these giants have different businesses, the market will share a common focus when reviewing their financial statements. The shockwaves triggered by OpenAI’s almost staggering trillion-dollar AI infrastructure investment plan are forcing investors to reassess the scale of spending and strategic intentions of these large tech companies.

Investors are about to receive a wealth of new information to judge how these companies are laying out their strategies amidst the AI wave. Analysts will closely watch whether Microsoft’s Copilot AI features are contributing to growth in its other businesses; whether Google’s AI investments are helping defend its core search and advertising businesses; and whether Meta’s claimed generative AI technology is truly enhancing its ad targeting capabilities.

Over the past three years, generative AI typified by ChatGPT and Gemini has ignited market enthusiasm and is believed to have the potential to reshape the global economy. However, the biggest bottleneck currently is the severe shortage of computing power. As a result, tech companies are racing to build supercomputing data centers based on Nvidia’s AI chips to meet the anticipated massive demand, and this quarter’s capital expenditure data is the most direct reflection of their determination to act.

The AI Arms Race Drives Up Capital Expenditure

In the AI gold rush, computing power is the new "shovel." Private company OpenAI has announced plans for about $1 trillion in future infrastructure construction in collaboration with partners such as Nvidia, Oracle, and Broadcom, setting an extremely high investment bar for the entire industry.

In addition to OpenAI, the largest builders are the four major internet giants releasing earnings this week. “You are seeing companies making huge investment commitments,” said Melissa Otto, Head of S&P Global Visible Alpha Research:

“The market will be very interested to hear their views on investment trajectories, and whether this growth will slow down.”

According to a Morgan Stanley analyst report from last week, they expect the total capital expenditure of the big tech companies to grow by 24% next year, reaching nearly $550 billion.

Balancing Investment and Returns

However, huge spending must be supported by corresponding returns. For Amazon, Microsoft, and Google, who compete directly in the cloud business, they must demonstrate that capital expenditure is translating into real revenue growth.

“Trillions of dollars are earmarked for spending, yet the ‘Tech Seven’ only generate hundreds of billions in free cash flow,” said Lauren Taylor Wolfe, co-founder of Impactive Capital, indicating that companies have yet to see significant returns from these investments.

Therefore, analysts will closely watch whether Microsoft's Copilot AI features are bringing growth to its other businesses; whether Google's AI investment is helping protect its core search and advertising businesses; and whether Meta's touted generative AI technology is truly enhancing its ad targeting capabilities.

A Snapshot of Each Giant's Spending Plans

  • Microsoft

In July, Microsoft said it expected capital expenditure for the upcoming quarter to reach $30 billion, a year-on-year growth of over 50%. However, CFO Amy Hood told investors that while capital expenditure will continue to grow in fiscal 2026, the growth rate will be lower than in fiscal 2025. She also admitted the company is facing infrastructure shortages stemming from AI demand. According to FactSet, analysts expect Microsoft’s capital expenditure for this fiscal year to grow 42% to $91.3 billion.

  • Alphabet (Google)

Alphabet in July raised its capital expenditure forecast for this year from $75 billion to $85 billion, with plans to increase it again in 2026. CFO Anat Ashkenazi said the company uses a highly rigorous process to determine needs and ensure investments are put to reasonable use. These expenditures serve not only cloud customers and AI lab DeepMind but also support proprietary products like Gmail, Google Maps, and YouTube. According to FactSet, analysts expect its 2025 capital expenditure to grow 57% to $82.4 billion, with the growth rate slowing to 12% next year.

  • Meta

This summer, Meta raised its median capital expenditure forecast for 2025 by $1 billion to $69 billion. CEO Mark Zuckerberg said, “We’re making all these investments because we firmly believe superintelligence will improve everything we do.” He emphasized that AI infrastructure gives the company an advantage in ad delivery and in developing new products such as the AI video app Vibes. According to FactSet’s survey, analysts expect Meta’s capital expenditure to surge by 84% this year to $68.4 billion, and further increase by 42% to $97 billion in 2026.

  • Amazon

Amazon plans to spend over $100 billion on capital expenditure this year and hinted that quarterly spending in the last two quarters will be about $31 billion. “We will continue to invest more capital in chips, data centers, and power to pursue the extraordinary generative AI opportunity we have,” CFO Brian Olsavsky told investors. He also pointed out that part of the spending supports the company's logistics and transportation network. According to FactSet, analysts expect Amazon’s capital expenditure to increase 41% to $117 billion this year, with next year's growth rate slowing to about 8%.

  • Apple’s “Hybrid” Strategy

Compared to its competitors, Apple’s spending is not in the same league. The company’s capital expenditure for fiscal 2024 stands at only $9.4 billion. Since it does not operate a public cloud service but instead adopts a “hybrid” strategy of leasing computing power from cloud providers, these costs are categorized as operating expenses.

However, the situation may be changing. CEO Tim Cook said this summer, “We are also substantially increasing our investment.” CFO Kevin Parekh added that capital expenditure will see “substantial growth,” but “it won’t be exponential.” According to FactSet, analysts expect Apple’s capital expenditure for fiscal 2025 to grow 28% to $12.1 billion, and further increase by 19% to $14.4 billion in fiscal 2026.

Risk Warning and DisclaimerThe market has risks; invest with caution. This article does not constitute individual investment advice, nor does it take into account the special investment objectives, financial circumstances, or needs of any particular user. Users should consider whether any opinions, views, or conclusions in this article are suitable for their specific situation. Investing based on this is at your own risk. ```