Tech giants boost AI spending as investors track capex over profits

Major tech companies announced massive AI infrastructure spending increases in their latest quarterly reports, triggering mixed investor reactions despite strong revenue growth across the board. The divergent market responses highlight that investors are now prioritizing capital expenditure trends over traditional profit metrics as the key indicator of AI market momentum.

What you should know: Tech giants are doubling down on AI investments even as markets react inconsistently to their spending announcements.

• Alphabet, Google’s parent company, saw shares rise following news of major capital expenditure increases, while Microsoft and Meta experienced stock declines despite announcing similar AI spending boosts and reporting increased revenues.
• The market reactions suggest investors are focusing more on capital expenditure growth patterns than quarterly profit-and-loss statements when evaluating these companies.

Why this matters: The continued high levels of AI spending from Silicon Valley’s biggest players indicate the AI boom isn’t cooling off anytime soon.

• A CNBC market analyst noted that the capital expenditure growth rate suggests spending won’t slow down, which means “fears of a bubble can be deferred for now.”
• These infrastructure investments represent the foundation for future AI capabilities and market positioning among tech leaders.

The big picture: Capital expenditure has emerged as the new metric investors are watching to gauge the health and sustainability of the AI market.

• Traditional financial metrics like quarterly profits appear less important to investors than companies’ willingness to continue massive AI infrastructure investments.
• The mixed stock reactions despite strong revenues demonstrate that markets are parsing AI spending commitments as signals of long-term competitive positioning rather than short-term profitability.