If 2025 was the year Wall Street came to grips with massive artificial intelligence infrastructure spending from tech’s megacaps, 2026 looks to be more of the same.
But as the price tag for AI goes up, so do expectations for the returns on investment.
Earnings season kicks off this week for tech’s biggest names, with reports from Apple, Meta, Microsoft and Tesla. Next week features earnings announcements from Alphabet and Amazon.
It’s the first opportunity for industry leaders to clearly lay out their spending visions for the year as AI dealmaking accelerates and companies move from announcing new data centers to constructing them.
It’s also a chance for investors to hear how and when those projected build-outs are expected to turn profitable.
In total, the four so-called hyperscalers — Microsoft, Meta, Alphabet and Amazon — are expected to boost capital expenditures this year to over $470 billion from about $350 billion in 2025, according to analyst estimates compiled by FactSet.
As they address analysts, some CEOs are likely to find themselves in defense mode, justifying their investments after sentiment soured in some capital-intensive corners of the market late last year.
To date, executives have repeatedly said that they can’t build out fast enough to meet the insatiable demand for new models and services.
In October, Alphabet, Amazon and Meta all upped their spending guidance for 2025, and Microsoft’s finance chief said higher growth was on the horizon.
Meta’s stock had its worst day in three years after the company lifted its spending forecast, with investors concerned that the social media company is most at risk of racking up losses on its infrastructure because it doesn’t have anything resembling a cloud computing business.
Chatter of an inflating AI bubble picked up in the fourth quarter, as OpenAI’s commitments reached $1.4 trillion, meaning the ChatGPT maker needs to keep raising hefty amounts of cash to fund its plans. And those plans are increasingly tied to the fate of the rest of the tech industry.
OpenAI announced multibillion-dollar agreements with Nvidia, Broadcom, Oracle, Amazon and Google as it lessened its reliance on Microsoft, which long served as the company’s anchor partner and investor. A year ago, OpenAI and Microsoft ended an exclusive cloud agreement.
But unlike OpenAI or Anthropic, which remain private companies, the megacaps need to show that the aggressive dealmaking is supporting a grand plan, while also growing revenue and keeping investors happy.
Here’s what Wall Street is expecting as tech earnings season kicks into gear.
Microsoft has to show that it can control costs as it builds out data centers to meet AI demand and to support its Azure cloud unit.
The stock dropped in October after the company upped its spending guidance, and CFO Amy Hood said capex growth in 2026 would mark an increase from 2025, after previously saying that growth would slow.
Analysts polled by FactSet expect capex to rise to $99 billion this fiscal year, which ends in June, and jump again over the next two years. The Visible Alpha consensus for fiscal second-quarter capital expenditures and finance leases was $36.25 billion, up 60% year over year.
In October, the company called for its operating margin to be flat year over year, while analysts polled by Visible Alpha foresee the narrowest operating margin in three years, at 67%.
While OpenAI diversifies away from Microsoft, the same is true from the other side.
In November, Microsoft announced a strategic partnership with Anthropic that included a $5 billion investment in the Claude maker. Anthropic committed to buying $30 billion of Azure compute capacity.
The company’s big growth play remains in cloud infrastructure.
In its last earnings report, Microsoft called for 37% growth in revenue at constant currency from Azure infrastructure and other cloud services for the current period, slipping from 39% at constant currency in the September quarter.
Analysts from Evercore ISI said in report last week that, after attending a Microsoft AI Tour event in New York, they felt that Azure continued to enjoy a “healthy competitive position.”
One big question for Microsoft remains adoption of its enterprise AI services, notably the Microsoft 365 Copilot add-on, as it’s viewed as a source of revenue growth for the company’s software suite. KeyBanc analysts, in a note on Jan. 22, offered some reasons for concern.
