Microsoft's Q4 revenue exceeded expectations at $90.01 billion, driven by 18% year-over-year growth, leading to an 8% surge in shares after hours. Strong Azure performance and a $3.2 billion AI investment gain contributed to the beat.
Tesla's stock plunged 13.5% after its Q2 earnings missed analyst expectations, revealing lower-than-anticipated profitability and negative free cash flow due to heavy investments in Robotaxi and Optimus, impacting the broader "Magnificent Seven" tech stocks.
Tesla has pushed back volume production targets for its Cybercab, Semi, Megapack 3, and Optimus robot to beyond 2026, citing manufacturing challenges and battery production needs. This comes as the company reported increased revenue but a 5% drop in net income due to heavy investment in new products.
Asia sees a 20-year high in capital expenditures across sectors like defense, AI, and energy, driven by geopolitical crises and trade disputes. Morgan Stanley predicts a 'super cycle,' boosting economic power and jobs in the region.
Wall Street analysts estimate AI capital expenditures could exceed $1 trillion in 2027, with 2026 projections rising to $800-$900 billion. Major hyperscalers are dramatically increasing spending: Alphabet ($185B), Amazon ($200B), Meta ($135B), and Microsoft ($190B). Despite mounting costs, analysts cite strong ROI indicators including Google's $462 billion backlog and accelerating cloud growth. Meta faces investor pressure with shares down 8% as free cash flow plummets.
Alphabet shares rose over 7% while Meta fell 9% on Thursday following Q1 earnings, with investors showing divergent reactions to AI spending plans. Alphabet raised its 2026 capex forecast to $180-190 billion and reported 63% cloud growth, while Meta increased capex to $125-145 billion and is pursuing a $20-25 billion bond deal. JPMorgan downgraded Meta to neutral, citing a challenging path to returns on AI spending without a cloud business like Microsoft and Amazon.
Artificial intelligence investments by US tech giants continue to soar, dwarfing those of Chinese AI firms, but China’s rising appetite for AI applications will compel its tech companies to increase their AI spending this year, according to analysts. The largest US tech companies are on track for more than US$700 billion in AI capital expenditures this year, driven in part by rising memory costs and continuously growing demand for AI applications. Google and Microsoft on Thursday both said that...
Meta Platforms reported Q1 earnings with adjusted EPS of $7.31 vs $6.79 estimated, and revenue of $56.31B vs $55.45B estimated, marking its fastest growth quarter since 2021. However, shares fell 7% after hours as capex of $19.84B came in below the $27.57B estimate, though full-year capex guidance was raised to $125B-$145B. Daily active people dropped more than 5% quarter-over-quarter to 3.56B, missing the 3.62B estimate, with Meta blaming internet disruptions in Iran and a WhatsApp restriction in Russia.
Tesla announced it will spend $25 billion on capital expenditures in 2026, triple its previous annual spend, as it transitions to an AI and robotics company. The increase from the previously announced $20 billion reflects expanded investments in compute infrastructure, data centers, manufacturing, and R&D. While CFO Vaibhav Taneja warned the company will head into negative free cash flow later this year, Tesla reported $44.7 billion in cash at quarter's end and views the spending as justified for future revenue streams.
Tesla announced it will increase capital expenditures to $25 billion in 2026, more than triple previous annual spending, as it transitions to an AI and robotics company. The figure surpasses the $20 billion expected in January. CFO Vaibhav Taneja warned negative free cash flow is expected for the rest of the year, though the company ended Q1 with $44.7 billion in cash. Musk framed the spending as necessary for future revenue streams from AI, Optimus robots, and expanded manufacturing.
Tesla announced it will triple its capital expenditures to $25 billion in 2026, up from $8.5 billion in 2025, as CEO Elon Musk accelerates the company's transition to an AI and robotics company. The $5 billion increase from earlier projections of $20 billion will fund AI training, chip design, Optimus humanoid robot production at scale, and a new semiconductor research fab in Austin. While Tesla reported $1.4 billion in free cash flow for Q1, CFO Vaibhav Taneja warned the company will head into negative free cash flow territory later this year. Tesla shares erased gains in after-hours trading despite the company holding $44.7 billion in cash.
