Big Tech earnings may set 2027 AI spending direction
Investors are watching the October earnings season for clues on how much Alphabet, Amazon and Microsoft will spend on AI infrastructure in 2027.
All three report third-quarter results in the second half of October. Analysts expect they may use the reports to give 2027 capital expenditure guidance, which could move markets sharply.
The three companies are spending hundreds of billions of dollars on data centres for AI computing. So far, strong cloud growth has justified the outlay.
Alphabet’s Google Cloud revenue rose 82 per cent year-on-year in the second quarter, with a 36 per cent operating margin. Heavy AI spending pushed Alphabet’s free cash flow to a negative 5.9 billion dollars.
It is widely assumed all three will raise capex in 2027. The question is by how much, and whether cloud revenue growth can keep pace.
Chip suppliers like Nvidia, Taiwan Semiconductor and Broadcom are also expected to feel the impact of the guidance.
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