Big Tech's $1.5T AI Buildout Stokes Wall Street Jitters
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- Amazon reported $53 billion in Q2 capital expenditures, up 69% year-over-year, as it built AI data centers and other infrastructure.
- Google disclosed negative free cash flow for the first time since its 2004 IPO, sending its stock down more than 6% the next day.
- Meta saw its stock sink more than 7% after reporting costs rose 55% year-over-year and that costs were growing faster than revenue.
- Microsoft shares jumped more than 15% after it beat expectations and held its spending forecast steady, with Azure sales exceeding $100 billion for the first time in a fiscal year.
- Wall Street estimates project Amazon, Google, Meta, and Microsoft will collectively spend $1.5 trillion on data centers over 2026 and 2027.
- Moody's Ratings flagged concentration risk, noting much of the growing computing backlog comes from partnerships with OpenAI and Anthropic that could "mask true demand".
- Alphabet raised its full-year spending forecast by $15 billion to as much as $205 billion, while Amazon posted $200.6 billion in Q2 sales but saw free cash flow plunge to negative $7.6 billion.
Why it matters: With four tech giants projected to spend $1.5 trillion combined on AI infrastructure and Google posting its first negative free cash flow since going public, the sustainability of this cycle now hinges on whether AI labs like OpenAI and Anthropic can consume and pay for all the compute they've contracted—a circular dynamic Moody's says could mask genuine demand and leave investors exposed if startup revenue falls short.
