Microsoft speeds up in Big Tech's data center spend-off

In a bold move signaling its commitment to artificial intelligence, Microsoft has announced a significant increase in capital expenditures, planning to invest $190 billion this year. This announcement came as a surprise to investors during the company's quarterly earnings call on Wednesday, marking a notable rise from analysts' expectations. With this new guidance, Microsoft's investment is now nearly on par with Amazon's projected $200 billion capital expenditures by 2026. While Microsoft's cloud revenue is steadily growing, it is not keeping pace with investor expectations, particularly due to challenges related to power and supply chain constraints that are hindering the expansion of data centers. CFO Amy Hood expressed confidence in the long-term returns of these investments but acknowledged that short-term revenue growth may remain limited. In a parallel situation, Amazon is also navigating similar challenges. Although the company did not revise its full-year capex guidance, CEO Andy Jassy assured stakeholders that their investments would yield positive returns, citing existing customer commitments for a significant portion of the expected expenditures. In the first quarter, Amazon allocated $44.2 billion toward property and equipment, a substantial increase from the $25 billion spent in the same quarter last year. Jassy highlighted efficiency as a key focus, noting that the company's proprietary Trainium chips are expected to enhance profit margins. Google, another major player in the AI space, has adjusted its capital expenditure guidance to a range of $180 billion to $190 billion, up from an earlier forecast of $175 billion to $185 billion. The tech giant is intending to make considerable increases in its capital investments by 2027, although specific figures have yet to be disclosed. In the latest quarter, Google invested $35.7 billion in property and equipment, significantly higher than the $17.2 billion reported in Q1 of 2025. Sundar Pichai, CEO of Google’s parent company Alphabet, indicated that the company is currently facing a $462 billion backlog in cloud services, attributing potential revenue losses to capacity constraints. Meta has also ramped up its spending, investing $19 billion in property and equipment, compared to $12.9 billion in the first quarter of 2025. The company revised its full-year capex guidance to between $125 billion and $145 billion, up from a previous estimate of $115 billion to $135 billion. CEO Mark Zuckerberg cited rising component costs, particularly in memory pricing, as a key factor in this adjustment. He expressed confidence in their investments, emphasizing Meta's ongoing focus on efficiency through initiatives like the Meta Compute program, which includes the rollout of custom silicon in collaboration with Broadcom and significant AMD chip integration to enhance their new Nvidia systems.