Overview
- First‑quarter earnings have run far ahead of forecasts, with FactSet showing about 84% of S&P 500 reporters beating estimates and blended profit growth near 27%, pushing major U.S. indexes to record highs.
- Big Tech disclosed a step‑change in AI infrastructure spending, with first‑quarter outlays topping roughly $650 billion and Wall Street now projecting hyperscale capex could exceed $1 trillion in 2027, a wave that has also lifted chip and data‑center suppliers.
- Alphabet raised its 2026 capital spending plan to $180 billion to $190 billion and said 2027 will be higher, while strong results, including $109.9 billion in revenue and record Google Cloud growth, helped drive the stock to all‑time highs.
- Investors penalized spending seen as less accretive, with Meta sliding about 9% after lifting its 2026 AI budget to $125 billion to $145 billion and Microsoft falling after outlining roughly $190 billion of 2026 capex and capacity constraints in Azure.
- Costs and counterparty risks are in focus as Microsoft tied $25 billion of its capex increase to higher component prices, memory costs climbed across the sector, and Microsoft disclosed that nearly 45% of recent cloud revenue came from OpenAI, concentrating exposure to a single AI customer.