Big Tech's AI capex push revives confidence in

What happened

Fresh capital expenditure commitments from Amazon, Microsoft, Alphabet and Meta Platforms have reinforced expectations that demand for artificial intelligence (AI) chips and data centre equipment will remain robust, easing concerns over a slowdown in spending, according to Bloomberg.

“Go back 12 to 18 months ago, it was about how much could you spend and how much capacity could you bring online,” said Gawrelski. Bloomberg also reported that several of these companies were among the publicly traded holdings of Leopold Aschenbrenner’s hedge fund, Situational Awareness, which reduced some equity positions after recent losses during the AI stock sell-off.

“For semiconductor stocks, it should help stabilise sentiment, but might not be enough to swing things around for a large upside in stocks,” said Sobhani.

Why it matters

Amazon raised its full-year capital expenditure forecast to $220 billion from an earlier estimate of $200 billion, with Chief Executive Officer Andy Jassy saying that most of the investment would be directed toward AI. The announcement came alongside earnings reports from the world’s largest cloud service providers, which showed continued investment in AI infrastructure despite recent market concerns.

Microsoft reaffirmed its capital expenditure outlook, excluding the impact of an accounting change. According to Bloomberg Intelligence analysts Kunjan Sobhani and Oscar Hernandez Tejada, the spending commitments improve the outlook for companies supplying computing and networking chips.

“With most large hyperscalers raising or reiterating capital spending plans in their earnings commentary, the likelihood of upside to 2026-27 consensus for computing and networking chipmakers is growing,” the analysts said in a note. Investors well received Amazon’s earnings after the company reported that revenue from its cloud computing business accelerated for the fifth consecutive quarter, indicating that its AI investments were delivering results.

What to watch

Microsoft also received a positive market response after reporting its fastest cloud growth in four years. Investor reaction to Meta and Alphabet, however, was more subdued. Meta shares fell nearly 8 per cent after the company paired a weaker sales forecast with commitments for almost $700 billion in future spending.