Big tech’s massive AI spending hike surprises analysts, raising doubts over whether returns can keep pace
Published Fri, Feb 6, 2026 · 11:26 PM
[NEW YORK] Amazon.com shares slid 9 per cent on Friday (Feb 6) after the company outlined a planned US$200 billion capital outlay for the year, stoking investor concerns about the scale of Big Tech’s spending on artificial intelligence.
Amazon on Thursday joined rivals in forecasting sharply higher expenditures this year, as US tech giants now aim to pour more than US$630 billion into datacentres and the AI chips that power them, an unprecedented level of investment.
Investors expected the companies to ramp up spending after they pinned their futures to the technology, but some analysts said the size of the increases surprised the market and raised questions about whether returns can keep pace.
“While the rising capital intensity is not a surprise directionally, the magnitude of the spend is materially greater than consensus expected,” MoffettNathanson analysts said, referring to Amazon’s prediction for a 50 per cent outlay jump.
The surge in spending has revived comparisons with the dot-com era boom of the early 2000s, which helped build the modern Internet but delivered only modest returns for many companies that financed the underlying infrastructure.
Amazon’s forecast also landed amid broader volatility tied to AI expectations. Shares of Microsoft and Alphabet, Amazon’s two biggest cloud rivals, fell after their earnings, even as new technology from the AI startups they back triggered a rout in software stocks and intensified a debate over an existential threat to the sector.
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The S&P 500 software and services index has shed about US$1 trillion in market value since Jan 28.
AJ Bell investment director Russ Mould said the declines reflected a move away from stocks “where positive surprises may be hard to achieve and it is easier to disappoint than many may think.”
He said hyperscalers, or large cloud companies, are now moving from an asset-light model to a more capital-intensive one, with capex growth far outstripping sales growth.
Amazon was set to lose around US$200 billion in market value if the losses hold. It trades at a price-to-earnings ratio of 27.01, compared with Microsoft’s 21.62 and Alphabet’s 28.36.
Tech executives confident about spending
Big Tech CEOs have so far remained undeterred by doubts over the spending, promising that returns from AI will far outweigh what they see as the cost of competing in a high-stakes race.
Amazon chief executive Andy Jassy echoed that sentiment on the post-earnings call, defending Amazon Web Services’ revenue growth of 24 per cent that was slower than rivals Google Cloud’s 48 per cent growth and Microsoft’s Azure 39 per cent rise.
“As a reminder,” he told analysts, AWS is a much larger business than its competitors and sustaining that level of growth on such a large base is different.
Some analysts backed his argument but said that spending left no space for mistakes.
“We do not think they would be spending US$200 billion in FY26 if they did not have the appropriate demand signals, but the margin of error is shrinking,” MoffettNathanson analysts said. REUTERS
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