The Great AI Squeeze: High Costs Take Center Stage In Hyperscalers' Earnings Reports
2026-02-10 05:30:00 ET
The AI Reckoning: Massive Capex Meets SaaS Disruption
The AI spending scare that rattled investors during Microsoft’s ( MSFT ) earnings call nearly two weeks ago intensified last week as Alphabet ( GOOGL ) and Amazon ( AMZN ) followed suit. On Wednesday, Google’s parent company reported record annual revenues exceeding $400 billion and a 48% surge in Google Cloud growth. Despite the impressive results, Alphabet stock softened after management signaled a staggering 2026 capital expenditure forecast of up to $185 billion. 1 The very next day, Amazon reported somewhat mixed Q4 results, with EPS coming in at $1.95, two cents below what the Street was expecting. On top of this miss, AMZN caught investors’ ire by boosting its 2026 spending forecast to $200 billion. 2 The stock settled 7% lower in the following day’s trading. This aggressive spending on data centers and compute capacity has left Wall Street wondering if the hyperscaler arms race is beginning to cannibalize free cash flow faster than it can generate new returns....
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The Great AI Squeeze: High Costs Take Center Stage In Hyperscalers' Earnings Reports
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