The case against the AI spending boom has been simple. Big Tech is pouring billions into chips and data centers without enough sales to back the bill.
This week's earnings made that case a lot harder to hold.
Alphabet, Amazon, Meta, and Microsoft all raised their 2026 capex plans on Wednesday. CapEx is the cash a firm spends on long-term assets like buildings and gear. In this case, it's the chips and data centers that run AI.
Microsoft jumped the most. It lifted its plan by 24% to $190 billion. Alphabet went to $185 billion, Amazon to $200 billion, and Meta to $135 billion.
Bank of America now pegs 2026 spending at $800 to $900 billion across the group. Then analysts looked one year out, and the numbers got bigger.
Both Evercore and BofA pushed their 2027 forecasts above $1 trillion. Jefferies told clients spending keeps climbing because demand keeps outrunning supply.
For months, the AI doubts came back to one question. Where is the cash going to come from?
Alphabet answered it on Wednesday. Q1 cloud sales rose 63% from a year ago, sending the stock up about 10% on the print.
CFO Anat Ashkenazi said the spending bump is needed to keep up with strong customer demand. Amazon CEO Andy Jassy said his firm is confident in the long-term capex bets it is making.
The bigger tell was the backlog. Google's pile of signed cloud deals roughly doubled from the prior quarter and ran 400% higher than a year ago, landing at $462 billion. BMO analyst Brian Pitz said the firm expects to book more than half of that as sales over the next two years.
Most of the backlog is tied to core Google Cloud deals. Pitz called it a "super-cycle" of demand that supports the rising capex plans.
Think of the backlog as orders already on the books. The chips and data centers being built today are the supply chain to deliver them.
Jefferies summed it up. Roughly $2 trillion of backlog now sits against $1 trillion of planned spending.
Not every name shared in the relief. Meta's stock fell about 8% after Mark Zuckerberg said next year's capex would land between $125 and $145 billion, up from a prior range that topped out at $135 billion.
Zuckerberg blamed higher memory chip costs. The bigger worry was free cash flow.
Meta brought in just $1.2 billion in free cash last quarter. A year ago that figure was $26 billion.
Free cash flow is the cash left over after a firm pays its bills and reinvests in the business. Jefferies said Meta would stay in the penalty box until the return on its AI bill gets clearer.
Meta spent $72 billion on capex in 2025. The new plan would nearly double that this year.
The chip and gear makers are the easy winners here. Intel just had a strong Q1 as the buildout pulled in demand for older chips, not just GPUs.
Evercore said custom chip programs from Google, Amazon, Microsoft, and Meta are seeing strong and growing demand. The shift is creating what one analyst called a CPU comeback as AI agents take on more business work.
RBC stayed positive on Nvidia, Micron, Marvell, Astera Labs, Arm, and Lattice. It also flagged solid setups for Broadcom, AMD, SanDisk, and Intel.
Google's contract pile is growing faster than the spending plans behind it.
