Microsoft and Meta Announce Massive AI Spending Plans, But Only Google Wins Over Investors

Microsoft plans to spend $190 billion on AI infrastructure in 2026, while Meta raised its capital expenditure to as much as $145 billion. But only Google's parent company, Alphabet, won over investors after the latest round of earnings reports.

Alphabet's stock rose nearly 7 percent after the company reported Google Cloud revenue of $20 billion for Q1 2026, a 63 percent year-over-year increase. Investors responded to clear evidence that AI spending is generating returns.

Meta's stock dropped more than 6 percent. CEO Mark Zuckerberg emphasized building leading AI models and products to reach billions of people, with monetization to follow. That explanation did not satisfy investors looking for near-term returns on the company's massive spending.

Microsoft's stock remained relatively flat. The company expects to invest $190 billion in capital expenditure for the year, with over $40 billion in the fourth quarter alone. About two-thirds of that spending goes to GPUs and CPUs to meet Azure customer demand and power AI tools like Microsoft 365 Copilot.

Microsoft CFO Amy Hood said AI profit margins are already better than cloud margins were at a similar stage of development. Azure and other cloud services grew 40 percent in the most recent quarter.

Combined AI capital expenditure from Google, Microsoft, and Meta is expected to exceed $600 billion in 2026. Snap CEO Evan Spiegel warned this week that tech executives are underestimating societal pushback against AI development.

The EU is investigating Meta for not adequately protecting children on Instagram and Facebook. The Senate Judiciary Committee unanimously approved AI chatbot age verification legislation.