Tech giants raise AI spending even as stocks fall

After first-quarter earnings, Microsoft, Alphabet and Meta have all raised how much money they plan to spend on data centers and servers, among other things. This is known as capex, or capital expenditure: investment in physical equipment and buildings.

Three companies, three upward revisions

Microsoft expects to invest about $190 billion in fiscal year 2026, up from about $154.6 billion. In the first quarter, the company's investments were $31.9 billion, 49% more than a year earlier.

Alphabet raised its 2026 guidance to $180-190 billion from $175-185 billion. The company also expects investments to rise significantly in 2027.

Meta raised its guidance to $125-145 billion from $115-135 billion. Meta's first-quarter investments were $19.84 billion.

AI News reports that the combined planned investments for four companies are $630-650 billion in 2026. That is AI News' aggregate figure. Only Microsoft, Alphabet and Meta are covered here, and the sources do not say which company is the fourth. The total therefore cannot be derived directly from the three companies' figures.

All four raised their guidance even though earnings came in above expectations. Microsoft's and Alphabet's shares fell in after-hours trading as investors worried about the high spending plans.

Short on capacity, not customers

AI News interprets this as demand being limited by how much capacity exists, not by a lack of customers. Microsoft cites capacity constraints, and Alphabet's CEO says the company is constrained by computing power in the short term. According to AI News, none of the companies explicitly raised concerns about a bubble during the earnings round.

Debt and warnings

IEEE ComSoc Technology Blog wrote in December 2025 that the five big hyperscalers (Amazon, Alphabet, Microsoft, Meta and Oracle) would invest more than $600 billion in 2026, an increase of 36% from 2025. Hyperscalers are the large cloud companies that run enormous data centers. According to the blog, about 75%, or roughly $450 billion, is tied directly to AI infrastructure.

The blog says the hyperscalers are increasingly borrowing money to cover the gap between their AI budgets and their free cash flow. In the first quarter of 2026, they issued $100 billion in bonds, and investors are seeking credit default swaps, a kind of insurance against a borrower being unable to pay.

Citing the fiber bubble of 1998-2001, the blog's editor issues a warning, writing that people should remember the sharp rise in fiber investment before the bubble burst. This is an assessment, not documented analysis.