Part 1: Immediate Action & Core Facts
Big Tech companies, including Microsoft, Meta, Alphabet, and Amazon, are set to report their earnings this week and next, with a focus on their massive investments in artificial intelligence (AI). The companies are expected to increase their AI-related capital expenditures by 30% to over $500 billion in 2026, according to analyst estimates. Meanwhile, Alphabet has taken the lead in the AI race, with its shares surging 29% in the last three months of 2025 following the strong reception of its Gemini 3 model and a deal to power Apple’s revamped Siri.
Investors are closely watching whether these costly AI bets will translate into sustained growth, particularly after some stocks declined in late 2025. Microsoft and Meta, which have both made significant investments in AI, saw their stocks fall more than 6% in the last quarter of 2025, while Amazon posted a modest 5.1% gain after its November deal with OpenAI.
Part 2: Deeper Dive & Context
AI Spending Under Scrutiny
As AI infrastructure spending continues to rise, investors are demanding clearer returns on these investments. The four so-called hyperscalers—Microsoft, Meta, Alphabet, and Amazon—are projected to boost their capital expenditures to over $470 billion in 2026, up from about $350 billion in 2025. Executives have repeatedly stated that demand for new AI models and services is outpacing their ability to build out infrastructure.
Alphabet’s Lead in the AI Race
Alphabet has emerged as a frontrunner in the AI race, with its shares surging 29% in the last three months of 2025. The company’s Gemini 3 model received strong market reception, and its deal to power Apple’s Siri has further solidified its position. Analysts suggest that Alphabet’s proprietary ecosystems, such as Google Search and Apple’s integration, give it a competitive edge.
Microsoft and Meta’s Challenges
Microsoft and Meta face pressure to demonstrate the payoff from their AI investments. Microsoft’s early investment in OpenAI has been called into question, with doubts arising about whether it has squandered its first-mover advantage. Meta, meanwhile, is under scrutiny for its expensive push into superintelligence, which has yet to yield clear financial returns.
Amazon’s Position in the AI Landscape
Amazon’s stock gained 5.1% in late 2025 after its deal with OpenAI, signaling that it is no longer considered an AI laggard. The company’s cloud-computing dominance positions it as a key player in the AI infrastructure space, though it still faces challenges in proving the profitability of its AI investments.
Investor Sentiment and Market Reactions
Investor sentiment toward Big Tech’s AI spending has been mixed. While Alphabet’s strong performance has boosted confidence, other companies face skepticism about their ability to deliver returns. Meta’s stock experienced its worst day in three years after the company raised its spending forecast, highlighting the market’s sensitivity to rising costs.
Earnings Reports and Future Outlook
Microsoft and Meta will report earnings on Wednesday, followed by Alphabet and Amazon next week. These reports will provide the first clear picture of how the companies plan to balance AI spending with profitability in 2026. Analysts will be watching closely to see whether the companies can justify their investments and outline a path to sustainable growth.