Big Tech firms Amazon (AMZN), Alphabet (GOOGL, GOOG), Microsoft (MSFT), and Meta (META) reported that they were set to spend as much as a cumulative $364 billion in their respective 2025 fiscal years, up from their prior estimates of around $325 billion.
Investors appeared to shrug off the increase for the most part.
Shares of three of the four tech giants spiked following their latest quarterly earnings reports over the past two weeks, which showed the companies broadly outperforming Wall Street’s expectations and lifting their capital expenditure forecasts. Meta and Microsoft shares surged roughly 11% and 4%, respectively, in Thursday’s trading session, following their quarterly results the prior afternoon. Microsoft’s surge briefly pushed the firm’s value north of $4 trillion for the first time. Alphabet stock also jumped following its report last week.
Microsoft reported capital expenditures of $88.7 billion in its 2025 fiscal year, which ended June 30, higher than the $80 billion it projected earlier. The company said its spending will grow at a slower pace in its 2026 fiscal year. During the first quarter, it expects to spend $30 billion, a 50% increase from the prior year.
“We will continue to invest against the expansive opportunity ahead across both capital expenditures and operating expenses given our leadership position in commercial cloud, strong demand signals for our cloud and AI offerings, and significant contracted backlog,” Microsoft CFO Amy Hood said in an earnings call with analysts.
Meta lifted the bottom of its range for projected capital expenditures, as the Facebook and Instagram parent company spends truckloads of money to build AI data centers and poach talent. The firm said Wednesday it expects spending to tally between $66 billion and $72 billion in its fiscal year 2025 versus its prior range of $64 billion to $72 billion given in May. The latter was already bigger than Meta’s initial estimate in February that it would spend up to $65 billion in 2025.
Meta CFO Susan Li said on a call with analysts Wednesday, “[W]e currently expect another year of similarly significant CapEx dollar growth in 2026 as we continue aggressively pursuing opportunities to bring additional capacity online to meet the needs of our AI efforts and business operations.”
Alphabet CFO Anat Ashkenazi said the tech giant would spend $85 billion in 2025 rather than its prior estimate of $75 billion, “given the strong demand for our cloud products and services.”
Using the top end of Meta’s range, $72 billion, the higher forecasts would put Big Tech’s spending at $364 billion, up from prior estimates of $325 billion in February.
Wall Street analysts broadly lifted their price targets on the three stocks, saying the investments are justified as they see companies benefiting from the AI boom.
Wedbush analyst Scott Devitt wrote in a note to clients Thursday that Meta’s “infusion of AI capabilities across the company’s ad stack and content recommendation engines are driving tangible results,” raising his outlook on shares to $920 from $750.
RBC Capital’s Rishi Jaluria said in his own note that Microsoft’s “AI footprint and cloud growth remain underappreciated,” raising his price target on the stock to $640 from $525.
Needham analyst Laura Martin said Google is “leading GenAI innovation,” lifting her price outlook on Alphabet shares to $220 from $210 last week.
Amazon was an exception to Wall Street’s bullish reception of the capital expenditures changes. Shares fell 8% Friday after the company raised its capital expenditure forecast, but its guidance for operating income at its AWS cloud computing unit was lower than expected, raising questions about its AI plans. Amazon said its $31.4 billion in second quarter capital expenditures was “reasonably representative of our quarterly capital investment rate for the back half of this year,” implying it would spend around $118.5 billion in the full fiscal year.
Amazon aside, the overall excitement over Big Tech’s AI spending is a reversal from investors’ wariness over companies’ torrid spending at the beginning of the year, when Chinese startup DeepSeek showed its AI models could produce similar results to OpenAI’s and were trained at a fraction of the cost. The development raised concerns that tech firms had overspent on AI infrastructure as they were still working on monetizing the technology.
Recently, top voices in the investment world, from legendary short seller Jim Chanos to Apollo senior economist Torsten Sløk, have sounded alarm bells that the stocks are in an AI bubble bigger than the dot-com era.
“The difference between the IT bubble in the 1990s and the AI bubble today is that the top 10 companies in the S&P 500 today are more overvalued than they were in the 1990s,” Apollo chief economist Torsten Sløk said in a July 16 blog post. (Disclosure: Yahoo Finance is owned by Apollo Global Management.)
It’s unclear exactly how much money companies are making on the technology since they don’t break out their AI revenue. Google said AI helped drive the company’s latest earnings beat, with AI Overviews achieving 2 billion monthly users, while Meta said AI helped drive its larger-than-expected ad revenue. Microsoft did not break out its Azure AI services revenue as it has in prior quarters, but said it “was generally in line with expectations.”
Amazon CEO Andy Jassy said, “Our AI business has a multibillion-dollar annual revenue run rate, continues to grow triple-digit year-over-year percentages and is still in its very early days.”
“They’re not tight for cash. They’re seeing some signs that these investments will bear fruit,” Cornell University professor Karan Girotra said in an interview with Yahoo Finance on Thursday.
DA Davidson analyst Gil Luria told Yahoo Finance, “The optimism has to do with returns that are coming 1, 2, 3, 5, 10 years out.”
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Laura Bratton is a reporter for Yahoo Finance. Follow her on Bluesky @laurabratton.bsky.social. Email her at laura.bratton@yahooinc.com.
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