Don’t expect Big Tech CEOs to pull back on aggressive capital expenditure plans to appease weary shareholders.
Today’s hot take: “My view is that this is an arms race. And if anyone cuts back, others would just get ahead of them in line. It’s about compute power. It’s about capex. It’s about building partnerships,” Wedbush tech analyst Dan Ives said on Yahoo Finance’s Opening Bid.
“I get in terms of the stock performance, and you know what that ultimately dictates,” he said. “They cannot, at this point, cut back. I mean, because when you think about where we are in the AI revolution, they are right now going to be in the monetization phase over the next six, nine, 12 months.”
By the numbers: Goldman Sachs expects a combined $5.3 trillion of capital expenditures for the four largest hyperscalers — Meta (META), Microsoft (MSFT), Amazon (AMZN), and Alphabet (GOOG, GOOGL) — from fiscal year 2025 to fiscal year 2030. Prior to the start of first quarter earnings, this estimate stood at $4.5 trillion.
The baseline aggregate capital expenditures estimate stands at $7.6 trillion between 2026 and 2031, spread across compute, data centers, and power.
Google, Amazon, Microsoft, and Meta collectively plan to allocate $725 billion to capital expenditures in 2026 — up a staggering 77% from last year’s record-breaking $410 billion.
The free-spending ways have hurt the stock prices of the “Magnificent Seven.”
Since peaking in mid-May, Magnificent Seven stocks are down more than 13%. Each name is down more than double-digit percentages from its respective 52-week high.
Bottom line: Tech CEOs seem hell-bent on doing two things over the rest of 2026.
One, fire people en masse because of AI-driven productivity. And two, continue to spend with reckless abandon on AI infrastructure — even if it means further stock price declines.
However, some on Wall Street do expect tech leaders to begin bending to their declining stock prices.
“I think what you’re going to see happen in second quarter earnings that’s going to surprise a lot of people is you’re going to see one or more of these hyperscalers announce a reduction of capex commitments,” Great Hill Capital chair Thomas Hayes said on Opening Bid.
Brian Sozzi is Yahoo Finance’s Executive Editor and a member of Yahoo Finance’s editorial leadership team. Follow Sozzi on X @BrianSozzi, Instagram, and LinkedIn. Tips on stories? Email brian.sozzi@yahoofinance.com.
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