Amazon, Meta, Microsoft face skeptical investors after Google sell-off

• Alphabet raised its 2026 capex forecast to $205 billion, triggering a stock sell-off that also pulled down Amazon, Meta, and Microsoft shares, with analysts expecting similar capex increases from the three companies reporting this week
• Amazon's long-term debt surged 81% to $119 billion from Dec. 31 to March 31, while Alphabet's debt rose 111% to $98 billion and turned cash flow negative in Q2 2026 for the first time
• Microsoft's free cash flow is expected to turn negative in Q4 for the first time since 2001, while Amazon remains in negative free cash flow territory after flipping red in Q1 2026

Market Summary: Tech Giants Face Investor Skepticism Over AI Spending

Key Developments

Major tech companies Amazon, Meta, and Microsoft face heightened investor scrutiny following Alphabet's disappointing market reaction to increased capital expenditure forecasts. All three megacap stocks declined after Google announced plans to boost its 2026 capex guidance to $205 billion while reporting results, marking a significant shift in investor sentiment toward AI infrastructure spending.

Financial Figures and Forecasts

• Microsoft: April projection of ~$165 billion in capex and finance leases for the year; analysts expect $190.1 billion
• Amazon: February guidance of ~$200 billion for 2026; consensus now at $207.4 billion (up $2 billion post-Alphabet report). Long-term debt surged 81% to $119 billion from December 31 to March 31
• Meta: 2026 capex forecast of $138.9-$145 billion
• Alphabet: Debt rose 111% to $98 billion in first half of 2026; turned cash flow negative in Q2 for the first time

Market Implications

Investors are pivoting from celebrating capex increases as signs of healthy demand to questioning returns on massive AI infrastructure investments. Evercore ISI analyst Mark Mahaney warns Alphabet's move "increases the odds of similar behavior" from Amazon and Microsoft, likely triggering sell-offs.

Amazon's free cash flow turned negative in Q1, while Microsoft is projected to see negative free cash flow in Q4—its first since 2001. Only Meta continues generating positive cash flow among the hyperscalers.

Cloud Performance

AWS leads the market with expected 32% Q2 growth, while Google Cloud showed exceptional 82% expansion in Q2. Azure is forecast at 39% growth.

Analysts note "growing AI fatigue" among investors despite strong underlying demand.