Another tech earnings season, another dizzying escalation of the artificial intelligence capital spending boom. The headlong growth in Big Tech’s data centre spending plans has been notable all year, but this week brought an extra twist. Meta and Microsoft both now predict their 2026 spending increases will be even bigger than 2025, while Alphabet jacked up its capex again for the rest of this year.
Following the giant chip and cloud computing deals that OpenAI has forged in recent weeks, it’s easy to see all this as an undifferentiated and undisciplined dash for growth. Look a little deeper, though, and there are big differences in the level of risk and likely returns. Once Wall Street’s AI fervour eases, investors will pay more attention in discerning which companies have the most sustainable capital spending.
One key difference is near-term demand. Microsoft, for instance, had expected that demand for its AI capacity would exceed supply until at least the end of this year. This week, its executives predicted the supply shortage would run until at least the middle of next year. Microsoft also claims the duration of business it has already booked closely echoes the expected useful life of its AI chips, helping to match its AI costs and revenue.