Microsoft, Google, Meta, and Amazon's financial reports this week, the market is only focused on one number

This week, as tech giants sequentially announce their earnings, Wall Street's focus will penetrate traditional metrics such as revenue and profit, zeroing in on a number that reveals more about the future: capital expenditure.

Microsoft, Alphabet, and Meta will report their quarterly results this Wednesday, while Amazon and Apple will follow on Thursday. Although these giants operate in different sectors, there will be a common focus as the market scrutinizes their financial reports. The shockwaves triggered by OpenAI's nearly astonishing 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 gauge how these companies are positioning themselves in the wave of AI. Analysts will closely watch whether Microsoft's Copilot AI functionality has driven growth in its other businesses; whether Google's AI investments help defend its core search and advertising business; and whether Meta's claimed generative AI technology truly enhances its advertising targeting capabilities.

Over the past three years, generative AI, represented by ChatGPT and Gemini, has ignited market enthusiasm and is seen as having the potential to reshape the global economy. However, the current biggest bottleneck is the severe lack of computing power. In response, tech companies are racing to build supercomputing data centers based on NVIDIA 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.

AI Arms Race Drives Up Capital Expenditure

In the gold rush of AI, computing power is the new "shovel." Private company OpenAI has announced plans for future infrastructure construction worth about $1 trillion in collaboration with partners such as NVIDIA, Oracle, and Broadcom, setting a very high benchmark for investment scale across the industry.

Apart from OpenAI, the biggest builders are the four major internet giants releasing their financial reports this week. "You are seeing companies making huge commitments to investment," 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 report from Morgan Stanley analysts last week, they expect total capital expenditure from large tech companies to grow by 24% next year, reaching nearly $550 billion.

The Balancing Act of Investment and Returns

However, massive expenditures must be supported by corresponding returns. For Amazon, Microsoft, and Google, which directly compete in cloud services, they must prove that capital expenditures are translating into tangible revenue growth.

"There are trillions of dollars earmarked for spending, while the free cash flow generated by the 'Tech Seven' is only in the hundreds of billions," 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 functionality has driven growth in its other businesses; whether Google's AI investments help defend its core search and advertising business; And whether the generative AI technology claimed by Meta really enhances its advertising targeting capabilities.

Overview of Spending Plans by Major Players

• Microsoft

In July, Microsoft stated that it expects capital expenditures for the quarter to reach $30 billion, with a year-on-year growth rate exceeding 50%. However, the company's Chief Financial Officer Amy Hood revealed to investors at that time that while capital expenditures for fiscal year 2026 will continue to grow, the growth rate will be lower than that of fiscal year 2025. She also acknowledged that the company is facing infrastructure shortages due to AI demand. According to FactSet data, analysts expect Microsoft’s capital expenditures for this fiscal year to grow by 42% to $91.3 billion.

• Alphabet

In July, Alphabet raised its capital expenditure forecast for this year from $75 billion to $85 billion and plans to increase it again in 2026. Chief Financial Officer Anat Ashkenazi stated that the company determines demand through a highly rigorous process and ensures that investments are utilized effectively. These expenditures not only serve cloud customers and the AI lab DeepMind but also support its own products such as Gmail, Google Maps, and YouTube. According to FactSet data, analysts expect its capital expenditures in 2025 to grow by 57% to $82.4 billion, with growth slowing to 12% next year.

• Meta

This summer, Meta raised its median forecast for capital expenditures in 2025 by $1 billion to $69 billion. CEO Mark Zuckerberg stated, “We are making all these investments because we firmly believe that superintelligence will improve everything we do.” He emphasized that AI infrastructure provides the company with advantages in advertising placement and the development of new products like the AI video application Vibes. According to FactSet's survey, analysts expect Meta’s capital expenditures to grow significantly by 84% to $68.4 billion this year, and to continue growing by 42% to $97 billion in 2026.

• Amazon

Amazon plans to spend over $100 billion on capital expenditures this year and hinted that the quarterly spending for the last two quarters of this year would be around $31 billion. “We will continue to invest more capital in chips, data centers, and power to pursue this extraordinary opportunity we have in the field of generative AI,” Chief Financial Officer Brian Olsavsky told investors. He also noted that part of the spending is used to support the company's logistics and transportation network. According to FactSet, analysts expect Amazon’s capital expenditures to grow by 41% to $117 billion this year, with growth slowing to about 8% next year.

• Apple's "Hybrid" Strategy

Compared to its competitors, Apple's spending scale is not on the same level. The company’s capital expenditures for fiscal year 2024 are only $9.4 billion. Since it does not operate public cloud services but instead adopts a "hybrid" strategy of renting computing power from cloud providers, these costs are classified as operating expenses However, the situation may be changing. CEO Tim Cook stated this summer, "We are also significantly increasing our investments." CFO Kevin Parekh added that capital expenditures will "grow significantly," but "will not be exponential growth." According to FactSet data, analysts expect Apple's capital expenditures for fiscal year 2025 to increase by 28% to $12.1 billion, and further grow by 19% to $14.4 billion in fiscal year 2026.