“If the company says that, there may be benefits to AI in five years, but we are no longer at the point where we get a pass.”
In order to keep up with competitors like Alphabet and Amazon.com, we will focus on the amount of waste they plan to dispose of in order to build infrastructure and software to power artificial intelligence applications.
The answer, estimated at around $70 billion (€61 billion) for each company’s current fiscal year, is more important to investors than actual profits, and will go a long way in determining whether a ferocious gathering of stocks will continue. になったんです。 English: The first thing you can do is to find the best one to do.
For almost two years, investors have been showering big technology in cash as they have caused extravagant returns and then reinvested hundreds of millions of dollars into AI. As Microsoft and Meta are currently garnering a rally 40% north of their April lows, analysts are worried about massive spending without AI profits halting investor enthusiasm.
“If the company says that there may be benefits to AI in five years, then we’re no longer at the point where we get a pass,” said Gabriela Santos, chief strategist of the Americas at JPMorgan Asset Management, in an interview. “Ratings are increasingly important, and ratings are important if a company is unable to increase sales at the speed of expected speed, or if it is not able to increase sales as quickly as Capex.”
Microsoft plans to report approximately $18 billion in capital expenditures for the quarter ended June 30th, an increase of about 30% from a year ago. Sales at the software giant are projected to rise 14%. Meanwhile, Meta is expected to double spending $16.4 billion from the same period last year, but revenues will rise by 15%, according to analyst estimates compiled by Bloomberg.
Last week we provided a hopeful marker for the Big Tech Bulls. Alphabet’s shares rose as the company increased CAPEX forecasts from 13% to $85 billion after providing better revenue than expected. This week’s profits have wiped out what was lost in 2025.
In particular, Meta and Microsoft bars could probably be higher as stocks rose about 20% this year compared to a 3.4% increase in the alphabet. It also features a different approach to Alphabet’s search-driven focus, and Microsoft is teaming up with Openai and Meta to develop a “super intelligence” with an army of engineers fascinated by the massive wage package.
Last quarter, AI spending proved to be somewhat beneficial. The strength of the meta has been credited to AI’s improved ad targeting, and Microsoft has seen a similar tailwind in the cloud business.
“Microsoft is actively investing in AI, which looks like a good strategy if you have a long-term view on stocks,” said Daniel Flax, senior research analyst at Neuberger Berman.
Santos spoke more cautiously, especially with AI spending.
“We’ve really refined our margins this quarter,” she said. “It’s still about ROI and can increase sales faster than what companies invest in AI Capex.”
With both companies increasing CAPEX, there is no room for companies that have generated billions of cash flow in recent years to decline.
“Microsoft is doing very well about cloud opportunities,” he said.
Krishna Chintalapalli, portfolio manager and head of high-tech sector at Parnassus Investments, said Azure, Openai Investment and the AI Assistant “Copilot” should alleviate spending concerns.
“These are all huge, growing businesses, and Microsoft seems to have less risk to non-AI businesses with repeat revenue,” he said.
Meta’s AI bet makes sense for investors too. “There are multiple ways to get profit from AI spending,” says Michael McKinnon, who manages more than $40 billion as portfolio manager at Artisan Partners.
In addition to his ability to create new business categories such as smart glasses, he cited his ability to improve efficiency and increase both user engagement and customer ad spending as a way for AI to drive growth.
This was “a very different kind of spending than we saw a few years ago when we were spending $20 billion on a real-life lab,” and a “low probability bet that didn’t justify the level of meta.”
Still, with a trillion dollar valuation, close to the long-term average and P/E ratio, investors may be cautious when the outcome begins. Following the options-derived report, the implicit movement of stocks has been relatively restrained, with Microsoft at 3.9pc and Meta at 5.8pc.
“Historically, rising caps are negative factors, but the more profitable a company, the better it is,” said Tony Despirito, global chief investment officer at BlackRock Bundistal Equities. “That’s why these big tech companies are treated differently than other companies might be.”
