Alphabet Raises Capital Expenditure Forecast by $15 Billion, Sparking Investor Scrutiny of Microsoft, Meta and Amazon
Alphabet raised its capital expenditure forecast by up to $15 billion, citing accelerated cloud revenue growth and rising demand for AI infrastructure. The budget update follows a quarter in which the company reported $5.9 billion in negative free cash flow, the result of massive outlays for data centers and processing equipment.
The capex increase intensifies investor scrutiny on Microsoft, Meta and Amazon, which are also funding expansive AI programs through debt. Morgan Stanley projects total big tech capital expenditures will reach $1.16 trillion in 2027, with Google and Amazon accounting for $658 billion of that total. The spending surge has also driven the 30-day stock correlation between the largest AI infrastructure builders and the semiconductor index to near zero, marking the lowest level in at least four and a half years.
From the sources (6 posts)
@charliebilelloRT @charliebilello: Google reported negative free cash flow of $5.9 billion in Q2, driven by massive capital expenditures on AI infrastruct…
@hedgeyeThe AI capex boom is draining free cash flow from the hyperscalers and pouring it into the chipmakers
@kobeissiletterThe AI trade is diverging sharply: The 30-day correlation between the largest US CapEx spenders and the semiconductor index, $SOX, is down to almost zero, near the lowest in at least 4.5 years. This marks a sharp decline from the +0.78 po
@thetranscript_Alphabet CFO: " Cloud revenues accelerated across all key areas and were up 63% to $20 billion. Revenue growth was driven by strong performance in GCP, which continued to grow at a rate that was much higher than Cloud's overall revenue grow
@businessMicrosoft, Meta and Amazon face renewed investor anxiety over debt-fueled AI spending after Alphabet boosted its capex forecast by up to $15 billion
@beth_kindigMorgan Stanley projects Big Tech capex could hit $1.16 trillion in 2027, with Google leading spending at $350 billion and Amazon following at $308 billion. $GOOG $AMZN $MSFT $META