On the night of tech giants' earnings reports, stock prices fluctuated, but capital expenditures are surging

Despite the latest earnings season bringing different fortunes to the stock prices of large tech companies, a clear signal has emerged: all giants are ramping up investments in artificial intelligence (AI) at an unprecedented scale. Whether it's Microsoft, Google, or Meta, they are planning or have already implemented record capital expenditures to build the infrastructure needed to support AI, highlighting the industry's firm bet on the future of AI.

After the market closed on Wednesday, the reactions to the performance of tech giants varied. Google's parent company Alphabet saw its stock rise by 5% due to accelerated revenue growth across various business lines; while Meta's revenue performance exceeded expectations, its stock plummeted by 8% due to a significant increase in spending; Microsoft’s stock also fell by more than 2% after its performance roughly met expectations.

However, behind the fluctuations in stock prices, the surge in capital expenditures (Capex) has become a common thread running through all earnings reports. Both Google and Meta have raised their capital expenditure guidance for 2025 and forecast a further "significant" increase in spending for 2026. Meanwhile, Microsoft's recently concluded fiscal quarter saw capital expenditures far exceed market expectations, setting a company record.

This round of coordinated "burning money" competition reflects the fierce rivalry among tech giants to meet the explosive demand for AI and cloud computing. For investors, this not only reflects corporate confidence but also raises cautious considerations regarding the return cycles of massive investments—amid the grand narrative of AI, high costs are becoming a focal point of market attention.

Google and Meta: Raising Guidance, Aiming for the Future

In the arms race for AI infrastructure, Google and Meta are conveying their determination to expand through clear guidance to the market.

Google's parent company Alphabet announced that it expects capital expenditures for 2025 to be between $91 billion and $93 billion. This is not only higher than the previous guidance of $85 billion but also marks the second upward revision of this expectation within the year. More notably, the company's Chief Financial Officer Anat Ashkenazi stated that capital expenditures for 2026 are expected to see a "significant increase." Behind this series of moves is the strong demand for Google Cloud, with its backlog growing by 46% quarter-over-quarter, totaling $155 billion.

Similarly, Meta has also raised its spending expectations. Meta has adjusted its capital expenditure guidance range for 2025 from the previous $66 billion to $72 billion to $70 billion to $72 billion. The company also warned that the dollar growth in capital expenditures for 2026 will be "significantly greater" than in 2025, with the overall spending growth rate expected to "accelerate significantly," primarily driven by infrastructure costs, including cloud spending and depreciation. This candid forecast of future costs directly led to pressure on its stock price after the earnings report.

Microsoft: Spending Exceeds Expectations, Highlighting Supply Bottlenecks

Unlike Google and Meta, which are focused on the future, Microsoft's current level of spending has surprised the market.

According to an internal memo obtained by Business Insider, Microsoft Chief Financial Officer Amy Hood emphasized that the company's capital expenditures for the recently concluded first fiscal quarter (ending in September) reached a record $34.9 billion, far exceeding the market's general expectation of $30 billion Hood wrote in the memo: "Demand continues to accelerate, and we are investing to seize future opportunities."

However, record spending did not boost stock prices. Microsoft's stock fell more than 3% in after-hours trading, partly due to market concerns that the growth in demand for AI and cloud computing has exceeded the company's supply capacity. Reports indicate that investors are generally worried about whether the tech giants' massive investments in AI infrastructure will yield corresponding returns. This unexpected spending, on one hand, demonstrates Microsoft's determination to meet strong demand, while on the other hand, it confirms the current supply tightness in the AI computing power market.

Opportunities and Risks: A Dual Consideration for Investors

The consistent massive investments by tech giants paint a picture of the future of AI for investors, but they also come with obvious risks.

The opportunity lies in the fact that these investments are based on real and growing customer demand. Google's cloud revenue growth of 32% year-over-year, multi-billion and even hundred-billion dollar contracts signed with companies like Anthropic and Meta, and the increase of monthly active users of its AI application Gemini to 650 million all demonstrate the enormous potential for AI commercialization.

However, the risks cannot be ignored. The stock price reactions of Meta and Microsoft indicate that the market's sensitivity to costs is increasing. Investors are closely examining how long it will take for these investments, often amounting to hundreds of billions of dollars, to translate into substantial profits. As Business Insider pointed out, Wall Street is generally concerned about the ultimate returns of these large-scale AI investments.

In summary, this earnings season clearly shows that tech giants are making a bold bet for leadership in the AI era. Although their stock price trends vary, their unified actions in capital expenditure suggest that the landscape of global tech infrastructure will be reshaped in the coming years. For investors, finding a balance between long-term growth visions and immediate cost pressures will be a core challenge in the near future