Big Tech’s big increase in AI spending surprises analysts and raises questions about whether revenues can keep up
issued Friday, February 6, 2026 · 11:26 PM
[NEW YORK] Amazon.com shares fell 9% on Friday (Feb. 6) after the company announced $200 billion in annual capital spending plans, raising investor concerns about the scale of Big Tech’s spending on artificial intelligence.
Amazon on Thursday joined its rivals in predicting a big jump in spending this year, as the US tech giant now aims to pump more than US$630 billion into data centers and the AI chips that power them, an unprecedented level of investment.
Investors had expected companies to increase spending after pinning their futures on technology, but some analysts said the size of the increase surprised the market and raised questions about whether profits could keep up.
“While increased capital intensity is not surprising directionally, the size of spending is significantly higher than consensus expectations,” MoffettNathanson analysts said, noting their forecast for a 50% increase in Amazon spending.
The surge in spending is re-emerging comparisons to the dot-com era boom of the early 2000s. Although the boom helped build the modern Internet, it produced only modest profits for the many companies that financed the underlying infrastructure.
Amazon’s prediction also came true amid widespread volatility related to expectations for AI. Shares in Amazon’s two biggest cloud rivals, Microsoft and Alphabet, fell after their earnings, even as new technology from AI startups they back sparked a sell-off in software stocks and intensified debate over the sector’s existential threat.
navigating asia
new world order
Get insights delivered to your inbox.
The S&P 500 Software and Services Index has lost about $1 trillion in market capitalization since January 28.
Russ Mold, investment director at AJ Bell, said the decline reflects a shift away from stocks that are “less likely to offer positive surprises and are more likely to be disappointed than many people realize.”
He said hyperscalers, or large cloud companies, are now moving from an asset-light model to a more capital-intensive model, with capital spending growth far outpacing revenue growth.
Amazon was expected to lose about $200 billion in market capitalization if the losses continued. The price/earnings ratio is 27.01 times, compared to Microsoft’s 21.62 times and Alphabet’s 28.36 times.
Technology executives feel confident about spending
CEOs of big tech companies have so far undaunted doubts about their spending, promising that the benefits from AI will far outweigh what they see as the costs of high-stakes competition.
Amazon CEO Andy Jassy echoed similar sentiments during a post-earnings conference call, defending Amazon Web Services’ 24% revenue growth as slower than rival Google Cloud’s 48% increase and Microsoft’s Azure’s 39% increase.
“Just to be clear, AWS is a much larger business than our competitors, and maintaining that level of growth on such a large base is unlike any other,” he told analysts.
Some analysts supported his assertion, but said there was no margin for error in spending.
“We don’t think we’ll spend $200 billion in FY26 without the right demand signals, but the margin of error is narrowing,” said MoffettNathanson analysts. Reuters
Decoding Asia Newsletter: A guide to navigating Asia in the new world order. Sign up here to get the Decoding Asia newsletter. Delivered to your inbox. free.
