This week could set the mood in tech stocks for the rest of the year. Microsoft, Alphabet (Google) and Amazon report quarterly results in the coming days, and according to Reuters, Wall Street expects faster growth from their cloud businesses. This time, though, their enormous AI investments will be at the center.
The money on the table
According to Reuters, the three companies, which together have a backlog of nearly $1.7 trillion, plan to spend up to $600 billion this year, mainly on data centers, chips and power. According to published estimates, Microsoft expects capital expenditure of about $190 billion in 2026, Alphabet up to about $205 billion and Amazon about $220 billion. According to Visible Alpha data, analysts expect Microsoft's Azure cloud business to grow by about 48%, up from 42% in the previous quarter.
Why investors are nervous
The results come at a difficult time. According to Reuters, the recent market selloff and worries about the rising cost of financing AI are tempering optimism. The past week showed this up close: Meta announced a raise of up to $95 billion in stock, and Broadcom and SpaceX closed huge chip financing deals. According to published reviews, credit spreads on hyperscaler debt are also near their widest levels of the year.
What to watch
The key question is not whether revenue will grow, but whether it is growing fast enough relative to spending. Investors will look for signs that AI products such as Microsoft's Copilot and Google's Gemini are generating meaningful revenue, and that demand for cloud services is not weakening. Raising investment forecasts without a matching rise in revenue could weigh on the stocks.
Why it matters for Israeli tech too
The cloud giants' spending is a direct source of demand for many Israeli companies, from chip and networking infrastructure developers to cybersecurity and software companies that sell through the cloud. If the results reassure the market, it will give a tailwind to the whole AI supply chain. If not, the pressure could reach Israel too.
