Investors are growing uneasy about the massive AI investments pouring out of America’s leading technology firms. On Wednesday, Meta felt the sharpest sting when its shares tumbled 7.4 per cent in after-hours trading after executives revealed plans to boost spending well beyond earlier projections, according to Bloomberg figures.
This came as Meta, Alphabet, Microsoft, and Amazon all posted quarterly earnings, with the group set to splash over $650 billion on AI this year alone, Reuters reports.
While Alphabet’s stock jumped 7.2 per cent on signs of real returns from its AI push, Meta’s lack of clear payoffs raised red flags amid rising capital expenditure and weaker ad income. Nasdaq futures slipped 0.5 per cent, mirroring broader worries that the AI boom might fizzle before delivering profits, as a new Morningstar report warns.
Forrester analyst Lee Sustar sums up the mood. There is still anxiety “about the sustainability of the AI boom” given the high cost and so far unrealised gains. Yet tech companies are pushing forward with plans, for this year and next, to pour billions into its development.
“With the potential payoff of AI leadership seemingly so high, the companies continue to make those bets, forcing investors and customers alike to assess how their interests are impacted,” Sustar added.
Meta now expects capital expenditure up to $145 billion for 2026, from $135 billion previously. CFO Susan Li conceded the firm has in past years “underestimated our compute needs” and must spend more to catch up.
CEO Mark Zuckerberg was candid about uncertainties. “I don’t think we have a very precise plan for exactly how each product is going to scale or anything like that.” He added confidence in their Superintelligence Lab. “But I think we have a sense of the shape of where these things should be… and I’m quite comfortable that the lab we’re building is on track to be a leading lab in the world.”
AI efficiencies could mean more job cuts at Meta, where staff has already dropped by 20,000 since 2023. Zuckerberg noted, “We are seeing more and more examples where one or two people are building something in a week that would have previously taken dozens of people months… We’re building the next evolution of our company around these people.”
“We don’t really know what the optimal size of the company will be in the future,” CFO Li added.
In contrast, Alphabet hailed 63 per cent growth in Google Cloud from AI demand. CEO Sundar Pichai said, “We own frontier models, we own the silicon [for chips], that really helps us stay head of the curve.”
Microsoft and Amazon also showed gains despite cash flow strains, with AWS up 28 per cent. As Nvidia dominates chip supply and analysts like Goldman Sachs flag recession risks, the high-stakes bet on AI continues.