If 2025 was the year Wall Street gradually came to terms with tech giants making massive investments in AI infrastructure, 2026 appears set to continue this trend. However, as the costs of AI investments surge, market expectations for returns on these investments are also rising.
This week marks the official start of the tech earnings season, with Meta Platforms (META.O), Microsoft (MSFT.O), and Tesla (TSLA.O) scheduled to report earnings after the market closes on Wednesday, and Apple (AAPL.O) reporting after the close on Thursday. Next week, Alphabet (GOOGL.O) and Amazon (AMZN.O) will announce their results.
This will be the first opportunity for industry leaders to systematically outline their spending plans for the year. This is particularly crucial as AI deals accelerate and companies transition from announcing new data center constructions to breaking ground. Simultaneously, it serves as a vital window for investors to understand when and how these massive construction plans will translate into profits.
According to analyst forecasts compiled by FactSet, the capital expenditures for the four "hyperscale cloud providers"—Microsoft, Meta, Alphabet, and Amazon—are projected to increase from approximately $350 billion in 2025 to over $470 billion this year.
When communicating with analysts, some chief executives may need to adopt a "defensive mode," justifying their investment decisions. By the end of last year, market sentiment had already cooled in some capital-intensive sectors.
So far, a point repeatedly emphasized by executives is that the pace of construction remains insufficient to meet the seemingly endless demand for new models and services.
In October, Alphabet, Amazon, and Meta all raised their spending guidance for 2025, while Microsoft's CFO indicated that even higher growth lay ahead.
Meta's stock suffered its worst single-day performance in three years after it raised its spending expectations. Investors worry that, lacking the support of a cloud computing business like its peers, the social media company's infrastructure investments are most likely to result in losses.
As OpenAI's pledged scale reached $1.4 trillion, discussions about an expanding AI bubble intensified significantly in the fourth quarter. This implies the ChatGPT developer must continuously raise massive funds to support its plans, which are increasingly intertwined with the fate of the entire tech industry.
OpenAI announced multi-billion dollar partnership agreements with Nvidia, Broadcom, Oracle, Amazon, and Google, while gradually reducing its reliance on Microsoft, which has long been its core partner and investor. A year ago, OpenAI and Microsoft ended their exclusive cloud services agreement.
However, unlike privately-held entities like OpenAI or Anthropic, tech giants not only need to demonstrate that their aggressive deal-making serves a grand strategic vision but must also reassure investors while expanding revenue.
The following are Wall Street's key focus areas as the tech earnings season unfolds in full force.
Tesla's situation differs slightly from that of other tech giants.
For years, Elon Musk has painted a futuristic picture of "sustainable abundance" for investors—a world where robots outnumber humans and perform nearly all work.
Investors focused on the present, however, seek updated guidance on Tesla's core automotive and energy businesses. In 2025, Tesla's vehicle deliveries fell 8.6% year-over-year, dropping from 1.79 million in 2024 to 1.64 million.
Meanwhile, Tesla's energy business achieved growth last year; this division sells battery storage systems to households, businesses, and large utility-scale projects.
Some energy sales also support Musk's AI company, xAI, and investors are watching to see if Tesla's board plans to invest in this OpenAI competitor.
Wall Street also wants to see if Tesla can realize future growth and profitability from its new ventures, including the Robotaxi autonomous ride-hailing service launched in 2025 and the yet-to-be-released Optimus humanoid robot.
Last quarter, Tesla's stock declined as Musk heavily promoted Optimus and Robotaxi but failed to adequately address concerns about the fundamentals of the auto business.
Investors are also closely monitoring Tesla's capital expenditure plans, particularly regarding chip technology underpinning future vehicles and robots. At the annual shareholder meeting last November, Musk stated that Tesla would advance cooperation with Samsung and TSMC to produce a new generation of chips.
Analysts surveyed by FactSet expect Tesla's capital expenditures to increase from approximately $9.5 billion in 2025 to $11 billion this year.
Microsoft needs to demonstrate that it can effectively control costs while accelerating data center construction to meet AI demand and support its Azure cloud business.
In October, the company's stock fell after it raised its spending guidance. CFO Amy Hood stated at the time that capital expenditure growth in 2026 would be higher than in 2025, contrasting with previous indications that growth would slow.
Analysts surveyed by FactSet project Microsoft's capital expenditures for this fiscal year (ending June) will rise to $99 billion, climbing further over the next two years. Consensus forecasts from Visible Alpha indicate the company's capital expenditures and financing leases for the second quarter of fiscal 2026 will reach $36.25 billion, a sharp 60% increase year-over-year.
In October, Microsoft anticipated its operating margin would remain flat with the previous year, but analysts surveyed by Visible Alpha expect the operating margin to fall to around 67%, its lowest level in three years.
As OpenAI gradually diversifies away from Microsoft, a similar "decentralization" is occurring on Microsoft's side.
In November, Microsoft announced a strategic partnership with Anthropic, investing $5 billion in the Claude model developer. Anthropic committed to purchasing $30 billion worth of Azure computing resources.
Microsoft's biggest growth bet remains concentrated in the cloud infrastructure sector.
In its previous earnings report, Microsoft projected that revenue growth for Azure infrastructure and other cloud services, at constant currency, would be 37% for the quarter, down from 39% in the September quarter.
Analysts at Evercore ISI stated in a report last week that after attending Microsoft's AI roadshow event in New York, they believe Azure maintains a "healthy competitive position."
A key question for Microsoft lies in the adoption of enterprise AI services, particularly the Microsoft 365 Copilot add-on. This is widely seen as a crucial growth driver for its software business. Analysts at KeyBanc noted some cautionary signs in a January 22 report.
The analysts wrote, "We heard from one partner that over half of enterprises are buying licenses for no more than 10% of their M365 users, and of those, less than 25% have deployed Copilot to up to 25% of users." The firm maintained its "Buy" rating on Microsoft stock.
The reality that Meta derives almost all its revenue from digital advertising leaves some investors perplexed by the company's heavy investments in AI without a clear path to monetization.
Furthermore, Meta's high-cost AI strategy has evolved over recent months following setbacks with the release of its latest-generation Llama model. A key step was the $14.3 billion investment in Scale AI this June, bringing in top talent including CEO Alexandr Wang.
In its October earnings report, Meta raised its 2025 capital expenditure guidance from a previous range of $66-$72 billion to $70-$72 billion. Mark Zuckerberg emphasized that the company is investing in AI for substantial future returns.
He stated, "We are already seeing returns in our core business, which gives us confidence to continue increasing investment. We want to ensure we are not under-investing."
Analysts surveyed by FactSet expect Meta's capital expenditures in 2026 to grow nearly 57% year-over-year, exceeding $110 billion. Goldman Sachs offers a more aggressive forecast, projecting capital expenditures will reach $125 billion this year and rise to $144 billion in 2027.
Analysts at Deutsche Bank wrote, "Concerns around the potential impact of spending on profitability, and the reduced financial flexibility in the near-to-medium term due to high investment, could partially outweigh market optimism for faster growth."
Last month, CNBC reported that Meta is developing a new-generation frontier AI model with the internal codename "Avocado."
Apple recently entered into a high-profile agreement with Google to use the Gemini model for a large-scale upgrade of Siri.
This spring, Apple delayed the overhaul of its core voice assistant, Siri, warning that the delivery timeline for some personalized features would be longer than expected. Analysts at Bank of America believe the partnership with Google could become a significant driver for iPhone upgrades in the coming months.
For a long time, Apple has faced the risk of falling behind rivals like OpenAI and Google in AI tools. Although the company is advancing its AI strategy, its pace is noticeably more cautious. Since launching Apple Intelligence in 2024, Apple has not released any major new AI products, and the rollout of this feature itself encountered challenges.
In January last year, Apple temporarily disabled the AI-powered news notification summary feature due to factual inaccuracies in the information it displayed.
Investors will watch closely for any adjustments to Apple's AI strategy or signs of rising capital expenditures. The market is also observing whether an iPhone "super cycle" is imminent. Analysts anticipate a strong quarter following positive reviews for the iPhone 17 released in September.
In October, Apple stated it expects current quarter revenue to grow 10% to 12% year-over-year, with iPhone revenue achieving double-digit growth.
At the time, Tim Cook told CNBC's Steve Kovach that the company anticipated its "best December quarter ever," with market reception for the iPhone 17 series "far exceeding expectations."
Amazon raised its 2026 capital expenditure forecast last October from $118 billion to $125 billion, citing strong demand for AI services. This figure is the highest among the tech giants.
FactSet data shows analysts expect Amazon's capital expenditures in 2026 to grow over 17% year-over-year, surpassing $146 billion.
Amazon has long been a leader in cloud infrastructure, but investors continue to pressure the company to more clearly articulate its AI strategy and demonstrate its ability to compete effectively with rivals like OpenAI, Google, and Anthropic.
In November, Amazon Web Services signed a $38 billion agreement with OpenAI, marking the first collaboration between Amazon and the ChatGPT developer. Under the deal, OpenAI will run workloads on AWS infrastructure using Nvidia's graphics processing chips.
The following month, CNBC reported that the e-commerce giant was in talks for a potential $10 billion investment in OpenAI. Amazon has long supported OpenAI's competitor, Anthropic, which recently completed a $10 billion funding round, valuing it at $350 billion.
Although AWS holds a leading position in the cloud infrastructure market, Microsoft's Azure is growing faster. On the Q3 earnings call, Andy Jassy stated that Amazon's related business is "gaining momentum," particularly in AI workloads.
Last year was a significant spending year for Alphabet, but it was also the company's best-performing year for its stock since 2009, as investor confidence in its AI strategy visibly strengthened.
Alphabet raised its 2025 capital expenditure guidance in October to a range of $91-$93 billion and stated it expects "meaningful growth" in 2026 spending. This followed a previous increase in July to $85 billion, driven by strong demand for cloud products and services.
Analysts project Alphabet's spending in 2026 will exceed $115 billion.
Over the past year, Google has secured partnerships with both OpenAI and Anthropic. In October, Anthropic signed a multi-billion dollar agreement with Google Cloud, planning to provide over 1 gigawatt of AI computing capacity by 2026. The deal grants Anthropic access to up to 1 million Google Tensor Processing Units.
Alphabet also recently struck a deal with Apple to use the Gemini model for a large-scale Siri upgrade. Announced earlier this month, the agreement is seen as a significant signal of Google's AI recovery following ChatGPT's strong debut.
Google already pays Apple billions annually to be the default search engine on the iPhone. The specific terms of the latest agreement will be a key focus for Wall Street.
Investors will also monitor whether search revenue continues to grow and if AI is eroding the company's core business. OpenAI stated earlier this month that it will soon begin testing advertising features in ChatGPT in the US.