All articles tagged with #capex
Oracle's new CFO Hilary Maxson says 'doing more with less' isn’t the answer, urging simplification of processes and smarter allocation of resources to deliver better customer outcomes, as the company continues layoffs to fund AI and data-center expansion, maintains a hefty capex plan, and emphasizes growth amid financial discipline.
Morgan Stanley argues the AI boom is entering a more capital-intensive phase, with 2027 capex for key hyperscalers rising about 57% from 2026 as they expand data centers and power infrastructure. While returns on invested capital could stay above 25%, the upfront cash required creates a widening financing gap since revenue and free cash flow lag. Credit spreads have widened for weaker borrowers, though cash-rich players like Nvidia and Broadcom have more financing flexibility, and private capital and asset-backed financing will play a larger role in funding hardware and infrastructure. Investors should watch 2027 capex guidance, free-cash-flow revisions, and financing activity to gauge who can sustain aggressive AI investments.
Wall Street strategists say AI-driven cloud spending is beginning to pay off for the megacaps: Microsoft’s Azure revenue hit a record level with over $100 billion in annual cloud sales, Amazon’s AWS grew about 36.7% in the latest quarter, and Alphabet’s cloud business is expanding, with Meta also showing potential for increased compute usage. Although free cash flow is expected to stay negative for most hyperscalers in FY27, monetization is forecast to ramp faster than spending as cloud backlogs top about $2.3 trillion, with roughly $725–$760 billion in capex planned this year to fuel AIBuild-out.
AMD posted a 50% revenue jump to $11.5 billion with adjusted EPS of $1.66 on stronger data-center chip demand, but its capital expenditures spiked to $808 million in Q2—double year-ago levels and higher than prior quarters—overshadowing the upside. Separately, SpaceX said it will source future AI chips exclusively from Nvidia, a development that could dampen AMD’s near-term orders and contributed to after-hours weakness in the stock.
Tech stock investors face a looming $1 trillion problem as hyperscalers accelerate AI-driven capex, with 2027 spending projected to top $1 trillion and capex set to outpace cash flow from operations from 2026 through 2028; Meta has raised its 2026 capex guidance and Alphabet signaled higher 2027 spend, while Microsoft remains the only major player with a favorable near-term free cash flow outlook.
Meta Platforms plans a massive AI-infrastructure push, guiding up to $145 billion in capex for 2026 and aiming to monetize excess compute by selling capacity to third parties. The move coincides with a Q2 2026 showing rising costs (R&D up ~68%) and a -8% drop in operating income, while free cash flow plunges to about $784 million and the balance sheet weakens with higher debt and shrinking cash. No share buybacks occurred in the first half of 2026. Investors will judge the AI investment on the returns it delivers, especially if free cash flow remains negative in 2026–27.
SpaceX's stock closed at a fresh weekly low ahead of its second-quarter earnings due Aug. 4, after a volatile week that left SPCX down about 5.8% and roughly 30% from its debut. A lockup expiration on Aug. 6 could free as much as 20% of shares, potentially adding selling pressure. Analysts note SpaceX's heavy capital needs and rising debt—projected to climb well beyond $200 billion by 2028—raising questions about returns, while merger chatter with Tesla and potential China data concerns add to the uncertainty.
Amazon posted Q2 net sales of $200.6B (up 20%), led by AWS growing 37% to $42.2B and advertising up 26% to $19.8B; diluted EPS was $5.75 but included about $53.4B of non-operating pre-tax income from Anthropic. Capex jumped to $54.2B this quarter, prompting a full-year capex forecast around $220B due to memory-cost pressures and capacity constraints; trailing free cash flow swung to a $7.6B outflow and long-term debt rose toward $129B. AWS backlog stood at $496B. For Q3, revenue is guided to $197-202B, below consensus as Prime Day shifts into June.
Meta Platforms’ stock fell after Q2 results showed diluted EPS of $6.18 (miss vs $7.22 expected) despite revenue rising 28% to $60.80B. Costs surged 55% to $42.03B, including $2.4B in legal charges and $1.18B in severance, driving operating margins down to 31% from 43%. Free cash flow collapsed to about $0.78B as capex totaled $31.08B; operating cash flow rose 25% to $31.9B, while debt jumped to $83.66B and buybacks were zero vs $10.17B a year earlier. Reality Labs lost $4.62B on $431M in revenue. For Q3, revenue guidance of $61–64B missed consensus, and full-year capex guidance narrowed to $130–145B, with Zuckerberg noting insufficient compute for demand.
Microsoft beat Q4 revenue expectations with $90 billion (up 18% YoY); Microsoft Cloud revenue rose to $59.3 billion (up 27%), with Azure up 43% YoY. Copilot paid seats surpassed 30 million, while the Productivity and Business Processes segment grew 14.3% to $37.85 billion and More Personal Computing declined about 4.4% to $12.85 billion. Capex for the quarter was $35.8 billion, slightly below forecasts, and management kept the 2026 calendar-capex outlook unchanged after an accounting update. Result: MSFT stock jumped as much as 8% in after-hours trading.
Ahead of July 29 earnings, Meta and Microsoft are both priced for about a 95% earnings beat, but the key driver is FY27 capex guidance. Microsoft backs its AI push with a $627B commercial backlog and heavy Azure expenditure, risking real free‑cash‑flow repricing if Azure reacceleration falters; Meta relies on ad revenue with strong margins (~82% gross) and a more bounded capex path, though Reality Labs losses weigh on profitability. The piece leans toward Meta as the cleaner AI play unless Microsoft’s Azure trajectory improves.
Microsoft is set to report Q4 earnings after the bell as investors scrutinize the ROI of its AI spending; with the stock down about 18% this year, analysts expect roughly $4.25 per share on about $87.7 billion in revenue, driven by Azure/cloud growth while capital expenditures and their impact on free cash flow remain key concerns.
Alphabet’s decision to lift its 2026 capex forecast to fund new AI data centers triggered a stock sell-off and heightened investor scrutiny of heavy infrastructure spending among hyperscalers, with Amazon, Meta and Microsoft also sliding. Analysts note AWS remains the cloud leader and Alphabet’s cloud growth is accelerating, but cash flow turned negative in Q2, underscoring the tricky balance between pursuing AI-scale capacity and delivering near-term returns.
Meta’s upcoming Q2 earnings will center on its capex plan, with expectations that 2026 capex could exceed the current $125–$145 billion guidance and 2027 capex rise to the low-to-mid $200 billions (Deutsche Bank cites roughly $210–$215B for 2027 and about $265B for 2028). The stock has lagged for a year, and investors worry higher spending could weigh cash flow even as Instagram/Facebook monetization remains muted; a potential third-party cloud venture could deliver a direct revenue stream to offset some costs.
Executives from Alphabet, Tesla, IBM, AMD and Mastercard defend surging AI-related capex as the infrastructure for monetizing AI and boosting productivity, arguing returns will show up even as shares in big tech stumble. Alphabet's Q2 capex hit about $44.9 billion with 2027 guidance raised; Tesla plans roughly $25 billion in 2026; IBM cites AI infrastructure spending as a pathway to future value. The piece contends the AI spend is a long-run bet that should pay off within about 24 months as use cases monetize and scale, despite near-term market skepticism.