Alphabet shares fell 7 percent after it raised its 2026 capital expenditure outlook, putting Amazon, Meta and Microsoft on the capex test bench ahead of earnings this week. On July 28, CNBC reported that markets had treated AI infrastructure investment as a growth signal, but have recently begun to weigh cash drain and financial strain against uncertain returns more closely.

Earlier, Alphabet, Google's parent, raised the top end of its 2026 capital expenditure outlook to $205 billion as it reported second-quarter results. The move reflected a push to speed up expansion of new data centres to meet AI demand. Alphabet shares then fell 7 percent on July 24, and Amazon, Meta and Microsoft shares also declined.

Attention is focused on whether other big tech companies will increase capital expenditure further. Microsoft and Meta will report results after the market closes on July 30, and Amazon will report on July 31. Evercore ISI's Mark Mahaney said Alphabet's higher capex increases the likelihood that Amazon and Microsoft will make similar decisions.

Microsoft in April put its annual capital expenditure and finance lease total at $190 billion. Of that, $25 billion reflected higher component prices after memory supply fell due to AI chip demand.

Amazon's capex consensus rose by about $2 billion after Alphabet's earnings report to $207.4 billion. Amazon in February gave 2026 capex guidance of $200 billion and maintained it in April. Markets see the potential for an increase reflecting AI, in-house chips, an early-stage satellite internet service and rising memory prices.

Financial strain is also increasing. Amazon's long-term debt rose 81 percent from Dec. 31 last year to March 31 this year to $119 billion. Alphabet's long-term debt rose 111 percent in the first half of 2026 to $98 billion, and its second-quarter cash flow turned negative for the first time. Amazon's free cash flow also turned to a deficit in the first quarter, and a deficit is expected on an annual basis as well.

There is no sign that demand itself has weakened. Google Cloud grew 82 percent in the second quarter, the fastest pace since at least 2020. AWS revenue growth was 28 percent in the first quarter and the second-quarter estimate is about 32 percent. Microsoft Azure and other cloud services grew 40 percent in the first quarter and the second-quarter estimate is 39 percent. Meta said in April its capex this year could be $138.9 billion, up to $145 billion, and it is also considering computing power for external sales.