On Wednesday, major technology companies Amazon, Meta, Microsoft, and Alphabet surpassed revenue expectations on Wall Street. However, ambitious plans for future capital expenditures prompted after-hours selloffs, affecting investments linked to technology.
Meta’s shares fell by 6% after it raised its capital spending forecast for 2026. Microsoft and Amazon also experienced declines due to the significant costs associated with their artificial intelligence (AI) initiatives. In contrast, Alphabet’s shares rose, buoyed by strong cloud computing sales.
Amazon announced first-quarter net sales of £181.5 billion, reflecting a 17% increase compared to the previous year. Its earnings per share were reported at £2.78, significantly higher than the estimated £1.62. The company expects second-quarter sales to range from £194 billion to £199 billion, surpassing market consensus.
Microsoft recorded fiscal third-quarter revenue of £82.89 billion, an 18% rise year-on-year, with operating profit reaching £38.4 billion. The company’s AI division now generates an annual revenue rate of £37 billion, marking a remarkable 123% increase compared to the previous year.
Meta reported revenue of £56.3 billion, bolstered by an extraordinary one-time tax benefit of £8 billion, while Alphabet’s revenue reached £109.9 billion. Google Cloud registered sales of £20 billion, nearly £2 billion above Wall Street’s projections.
The substantial increase in capital spending, anticipated to exceed £650 billion across these four companies by 2026, has raised investor concerns. Many fear that growing depreciation and operating costs may outstrip near-term revenue gains from AI.
Investors have responded by focusing on the sustainability of these expenditures, leading to declines in Meta and Microsoft’s stock prices. In the coming days, market participants will monitor whether the heightened capital expenditure is perceived as prudent investment or excessive spending.
