Big Tech Boosts AI Cloud Revenue, Raises 2026 Capex

Microsoft, Alphabet, Meta and Amazon reported stronger-than-expected cloud and AI revenue in Q1 and increased their combined capital expenditure plans for 2026 to about $630 billion–$650 billion.

Microsoft reported $82.9 billion in revenue for the quarter, an 18% year-over-year increase. Azure grew 40%. The company reported annualized AI revenue above $37 billion and Microsoft Cloud revenue reached $54.5 billion, up 29%. Commercial remaining performance obligations rose 99% to $627 billion. CFO Amy Hood raised fiscal 2026 capex guidance to $190 billion. Quarterly capex was $31.9 billion, up 49% year over year. CEO Satya Nadella described the period as the start of an “agentic computing era.” Management guided Q4 Azure growth at 39% to 40% in constant currency as more capacity comes online.

Alphabet posted total revenue up 20% year over year, with Google Cloud revenue up 63%. Net income for the quarter was $62.57 billion, or $5.11 per share, an 81% increase year over year. CEO Sundar Pichai warned the company is “compute constrained in the near term.” Alphabet raised 2026 capex guidance to $180 billion–$190 billion and indicated 2027 capex is expected to increase compared with 2026.

Meta reported Q1 revenue of $56.31 billion, a 33% increase from a year earlier. CEO Mark Zuckerberg called it “a milestone quarter.” Meta raised full-year 2026 capex guidance to $125 billion–$145 billion from a prior range of $115 billion–$135 billion, citing higher component prices and added data-center costs. Q1 capex was $19.84 billion. Meta pointed to AI-driven ad systems, including Advantage+, as a source of near-term revenue growth.

Amazon reported AWS revenue of $37.59 billion, up 28% year over year, its fastest growth in 15 quarters. AWS operating income was $14.2 billion at a 37.7% margin. Total Amazon revenue was $181.5 billion, up 17%, with net income of $30.3 billion. CEO Andy Jassy noted Amazon’s custom chips business reached a $20 billion revenue run rate and is growing at triple-digit rates. Amazon announced new AWS partnerships with OpenAI, Anthropic, Meta, NVIDIA and Uber.

Taken together, the companies increased 2026 capital plans to roughly $630 billion–$650 billion. Executives across the calls referenced strong demand for cloud compute and AI infrastructure that is outpacing current capacity.

Shares of Microsoft and Alphabet fell in after-hours trading after both raised capex forecasts, despite beating revenue and profit expectations. Executives reported that AI-related revenue is driving near-term growth while supply and capacity constraints remain.

Company statements indicated continued investment in data centers, custom silicon and related systems into 2027, with Alphabet specifically indicating 2027 capex will be higher than 2026.