Overview
- Amazon forecast about $200 billion in 2026 capital expenditures, with the largest share directed to AWS infrastructure including data centers, custom chips, networking, robotics and low Earth orbit satellites.
- Alphabet guided to $175 billion to $185 billion in 2026 capex, roughly double 2025, saying AI compute investments are needed as Google Cloud revenue jumped 48% to $17.7 billion and supply remains constrained.
- Investor reaction has been severe, with Amazon shares down roughly 8% to 11% in after-hours and premarket trading and more than $1 trillion erased from major tech market caps over the past week, prompting several price target cuts.
- AWS revenue rose 24% to $35.6 billion in the quarter, and Amazon disclosed its Trainium and Graviton chips now exceed a $10 billion annual run rate as CEO Andy Jassy said the company is monetizing capacity as fast as it is installed.
- Collectively, hyperscalers are projected to spend about $630 billion to $650 billion in 2026 on AI-related infrastructure, intensifying analyst scrutiny on returns and warning that the margin for error on ROI is shrinking.