The AI investment frenzy shows no signs of cooling down! Amazon and Microsoft earnings reports signal strong demand for computing power

According to the Zhihui Finance APP, the aggressive AI investment plans recently announced by Amazon (AMZN.US), Microsoft (MSFT.US), and Google’s parent company Alphabet (GOOGL.US) provide the latest evidence that demand for chips and related equipment will remain strong, offering embattled hardware suppliers some breathing room.

On Thursday, Amazon raised its full-year capital expenditure forecast to $220 billion, up from the previous estimate of $200 billion. CEO Andy Jassy stated that most of the spending would be directed toward artificial intelligence.

This outlook coincides with a series of earnings reports from the world's largest cloud computing service providers, showing that these tech giants remain undeterred in their ambitions to build AI infrastructure.

Microsoft, after excluding the effects of accounting changes, confirmed its capital expenditure guidance; Google’s parent, Alphabet, raised its spending expectations; Meta Platforms also lifted the lower end of its capital expenditure guidance.

This is undoubtedly positive news for chipmakers, network equipment suppliers, and other technology providers to data centers. In recent times, concerns over slowed spending had weighed down the stock prices of these companies.

Industry research analysts Kunjan Sobhani and Oscar Hernandez Tejada pointed out that the industry outlook for the coming year is becoming clearer. In their report they stated: “As most major hyperscalers have raised or reaffirmed their capital expenditure plans in earnings reports, the chances of compute and networking chipmakers exceeding earnings expectations in 2026 and 2027 are rising.”

Amazon’s earnings report was well received by investors, with its cloud computing revenue accelerating for the fifth consecutive quarter, sending a clear message that the company’s massive investments are turning into tangible results.

Microsoft also saw an enthusiastic market response. After reporting its fastest cloud business growth in four years on Thursday, the company’s market capitalization soared by nearly $500 billion, the largest single-day value jump ever for a company.

By contrast, Meta and Alphabet did not win the same favor from investors. The market remains skeptical about whether the spending by the two companies can yield clear returns.

On Thursday, Facebook and Instagram parent Meta’s share price plunged nearly 8% due to weak sales guidance, despite pledging to keep future spending close to $700 billion.

Wells Fargo analyst Ken Gawrelski commented that simply “heavily investing in AI” no longer impresses the market; investors are increasingly focused on returns. “Twelve to eighteen months ago, the market cared about how much you could spend and how much computing power you could bring online. Now the focus has rightly shifted to investment returns.”

On July 23, Google fell by 7.1% after the company forecast the 2026 full-year capital expenditure at $195-205 billion, up from the earlier estimate of $190 billion.

In any case, these massive outlays are expected to benefit suppliers that have recently been in a slump.

Memory chip giants Samsung Electronics and SK Hynix saw steep share price drops earlier this week, but rebounded following the latest spending signals. Companies such as CoreWeave (CRWV.US), Nebius Group (NBIS.US), Intel (INTC.US), and NVIDIA (NVDA.US) also bounced back from similar declines.

According to sources, several of these companies were previously among the publicly disclosed holdings of Leopold Aschenbrenner’s hedge fund Situational Awareness, which reduced some stock positions after losses during the recent AI sector slump—a possible reason for the declines in certain stocks.

Analyst Sobhani pointed out that the current key issue is whether chip and equipment suppliers can maintain the momentum of the rebound. He cautioned that data center companies have hinted they might slow spending if needed, so excess returns are not guaranteed. “For semiconductor stocks, this should help stabilize sentiment, but may not be enough to shift the landscape or drive a major rally,” he said.