Technology giants have launched a frenetic race in the development of artificial intelligence (AI). The promises that this technology will provide to companies and homes seem infinite and investors see a succulent business. But its development requires investing huge amounts of money, which is starting to get on Wall Street’s nerves.
Amazon, Alphabet, Apple, Microsoft and Meta are five of the magnificent seven, the group of giants that also includes Nvidia and Tesla. They are the companies that rule Wall Street. This week, they presented the results of their last quarter of their fiscal year, a period that varies between them. They have recorded a joint profit of 157,813 million dollars, which represents an increase of 37% compared to the previous year, without including a Meta provision of 15,390 million after the approval of the Big and Beautiful Law promulgated by Donald Trump.
The magnificent seven represent approximately 25% of Wall Street capital, an extraordinary dominance by historical standards. His behavior on the Stock Market fits the expression of “irrational exuberance”, coined by Alan Greenspan, that markets guru who chaired the Federal Reserve at the end of the last century and the beginning of this one. Nvidia this week became the first company to reach five trillion dollars in stock market value. It is the first time in history that this record has been reached. Apple and Microsoft have also surpassed the four billion barrier. And they have accumulated double-digit stock market increases so far this year, fueled by the AI chimera.
The overwhelming results figures spur the technology giants in the race for AI. A competition that brings them more business, but consumes large doses of capital. This strategy is beginning to worry analysts. The seven largest technology companies in the world obtained revenues of 588,768 million dollars, 17% more. But they have announced investments of around $365 billion for next year. Investors are beginning to wonder if they are facing a bubble. And whether these giants will be able to make these huge investments profitable.
Meta, Microsoft, Alphabet, and Amazon have reported this week a strong increase in capital expenditures during the last quarter, and have acknowledged that, during the next year, they will increase it again due to plans to deploy new digital infrastructures linked to artificial intelligence (AI), especially chips and data centers. A scenario that has reopened doubts. Too much money in too little time.
“Companies seem to be immersed in an arms race and feel forced to invest heavily simply because their competitors are doing the same. The fear of losing market share if they fall behind is driving spending to potentially excessive levels,” says Dirk Steffen, chief investment officer for Europe at Deutsche Bank in a report that analyzes whether there is a risk of a bubble in the AI sector.
Meta plans to invest about $71 billion in AI this year, compared to the $66 billion expected so far, and by 2026, it expects noticeably higher year-on-year growth, which implies at least $101 billion. Facebook’s parent company yesterday recorded the worst session on the stock market in three years (-11.3%) due to investors’ doubts about the company’s ability to make profitable the overwhelming investment in AI. The company founded by Mark Zuckerberg reduced its profits by 83% after recognizing an accounting hit of 15,930 million due to the implementation of the Big and Beautiful Law of Trump, which forces him to provide money for taxes.
Alphabet, Google’s parent company, estimates that it will spend about $92 billion on capital expenditures to develop AI, compared to the $85 billion previously anticipated. Microsoft expects to increase the pace of investment in its fiscal year 2026. Although it does not offer specific figures, analysts agree that this represents an investment of between 120,000 and 140,000 million dollars. The company reported that during the last quarter alone it allocated nearly $34.9 billion to capital expenditures. Amazon, which presented results yesterday, once again increased its capital expenditure forecast for this year as a whole by 6%, to $125 billion.
The company chaired by Jeff Bezos announced this week that it will lay off about 14,000 workers in its corporate area due to advances in digitalization.
“Microsoft and Alphabet have admitted capacity constraints that restrict AI-related revenue growth, while Meta acknowledges that it operates in a state of computing capacity shortages. We continue to believe that we are in the early stages of an inflection point in the growth rate of AI adoption that will significantly drive upward estimates across the supply chain and technology infrastructure of companies exposed to this growth,” says Heath Terry, analyst at Citi Research.
Meta specified that capex, an indicator that companies use to refer to long-term productive investments or capital expenditure, amounted to 19,374 million dollars in the third quarter, 110% more than in the same period of the previous year. Meta CEO Mark Zuckerberg said he was not worried about excessive spending on AI infrastructure.
Microsoft tries to clear up investors’ doubts. This week, during the presentation of results, it highlighted that its cash flow or cash generation rose 32%, to 45.1 billion dollars, with a 33% increase in free cash flow, which stood at 25.7 billion. Microsoft CFO Amy Hood acknowledged during the conference with analysts that the company cannot meet current demand for AI, despite spending billions on its development. “I thought we were going to catch up,” he said, according to Bloomberg. “We’re not. Demand is increasing. It’s not increasing in one place. It’s increasing in many places.” Investors have also punished the company after the results presentation. Yesterday it lost almost 3%. And this week it became known that it will have a 27% stake in the new OpenAI, the developer of ChatGPT, valued at about $135 billion.
Microsoft’s cloud computing subsidiary Azure, the vehicle through which it channels its AI business, posted a steady 39% revenue increase, but it fell short for investors. “A higher growth rate would have provided more certainty that the investment binge is worth it,” Bloomberg notes.
Google has defended that its Gemini AI assistant already has 650 million monthly active users, 44% more than three months ago. And its cloud platform has signed contracts for billions of dollars in the first nine months of this year, which already exceed the sum of the previous two years, according to Alphabet’s financial director, Anat Ashkenazi, in a call with analysts.
Unlike its rivals, its shares rose in the markets, with an advance of 2.45%. In this case, capital spending for investments in the last quarter accounted for 49% of Alphabet’s operating cash, compared to 64% for Meta and 77% for Microsoft.
Apple is the only one of the big ones that seems to take it more calmly. The apple company only allocated 12,720 million to investments to develop AI in 2025, 35% more than the previous year, but far from what its rivals spend. While many of the biggest tech companies compete to build huge data centers for their AI ambitions, Apple is taking a more modest approach. Instead of buying as many chips as possible, it buys computing capacity from external partners, one analyst tells CNBC.
“One industry leader estimates that between $3 and $4 trillion will be spent on AI infrastructure through 2030. McKinsey forecasts data center capital expenditures to reach $5.2 trillion over the next five years,” adds Dirk Steffen of Deutsche Bank. “Historical precedents show that large-scale infrastructure builds often result in excess capacity, which can compress returns if demand does not meet expectations,” he adds.
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