AI spending boom faces investor scrutiny as costs mount

Investors are questioning whether the largest technology companies can sustain their rapid expansion of artificial intelligence infrastructure. Alphabet, Amazon, Meta, and Microsoft have outlined plans to spend more than $740 billion on capital expenditures this year, much of it read by Wall Street as spending on data centers and chips.

Recent results have highlighted the strain. Alphabet reported negative free cash flow of $9.1 billion in the third quarter, its second consecutive quarter in the red, while quarterly capital expenditures reached $51.4 billion. It expects to spend up to $205 billion this year, with spending rising further in 2027. Meanwhile, growth in Google Search advertising slowed to 12%, its weakest pace in five quarters. The company’s AI Mode is built into Search.

Amazon reported negative free cash flow of $42.4 billion over the past 12 months, compared with positive free cash flow of $14.8 billion the year before. It expects $220 billion in capital expenditures this year. Meta reported negative free cash flow of $2.1 billion in the third quarter and expects up to $145 billion in capital expenditures this year, even as ad revenue grew 26%. Microsoft reported positive free cash flow of $18.6 billion in its latest quarter and capital expenditures of $45.2 billion, below its $50 billion projection. It attributed the difference to delays in capacity from third-party providers.

According to S&P Global Market Intelligence, Microsoft, Alphabet, Amazon, Meta, and Oracle raised a combined $326 billion in debt in 2026, triple last year’s amount. Cloud businesses continue to grow, but investors are weighing that demand against the cost of supplying AI computing capacity.