Big Tech’s rising AI investments show market bubble ‘still has a good ways to go’
Big Tech firms’ increasing investments in artificial intelligence show that even if the stock market is in a bubble, equities still have room to run higher before it bursts.
Last week, Amazon (AMZN), Alphabet (GOOG, GOOGL), and Meta (META) hiked their capital expenditure forecasts for their 2025 fiscal years, while Microsoft (MSFT) reported higher-than-expected spending for the first quarter of its 2026 fiscal year.
“We’re still in such a massive growth phase that the bubble still has a good ways to go before we’re at risk of the massive correction,” Futurum Group analyst David Nicholson said.
Amazon said it expects to see its full-year capex hit $125 billion, up from its previous outlook of $118.5 billion. Alphabet lifted its guidance for expenditures for the third straight quarter to $92 billion at the midpoint from $85 billion. Meta also upped its capex forecast range for the third time this year to $71 billion at the midpoint from $69 billion.
Meanwhile, Microsoft reported capital expenditures of roughly $35 billion for its fiscal first quarter, ahead of the $30 billion expected by analysts tracked by Bloomberg. The company said its spending will rise at a faster pace in the 2026 fiscal year, which ends in June, than it did in 2025.
That spending doesn’t even fully capture how much Big Tech is spending on AI overall. In addition to capex, some companies’ operating expenditures are going to third-party AI cloud providers as they rush to meet AI demand while building out their own data centers. Microsoft and Meta, for example, are customers of AI data center provider CoreWeave (CRWV).
Investors are continuing to bet that the rising costs for Big Tech are beneficial for the AI ecosystem and an indication that each company is staying competitive with its rivals, for the most part. That optimism is lifting stocks. Shares in Amazon reached an all-time high last week following the company’s results, and Alphabet stock also jumped.
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But in cases where investors questioned tech firms’ fundamentals, stocks showed a less favorable reaction. Microsoft shares fell slightly to mirror a broader market downturn because its Azure cloud revenue was slightly below investors’ super-high expectations, analysts said. Meta was an outlier, suffering a steep loss in its stock price as investors expressed doubts over the strength of its AI strategy relative to its peers and its mega-high spending.
Analysts told Yahoo Finance that investor confidence in Big Tech’s AI push remains strong because, with the exception of Meta — which raised $30 billion in debt through a bond sale last week — most companies continue to fund AI projects with healthy cash flows from their core businesses while also beginning to monetize their investments. That progress has helped offset concerns about soaring expenses.
