As Big Tech firms begin rolling out their latest earnings, analysts say capital expenditure (capex) is the number that could reveal the most about their future performance.
Unlike past focus on revenue or profit alone, capex reflects how much companies are investing in data centres, chips and infrastructure—essential building blocks as the AI arms race intensifies.
Major players are ramping up spending: Microsoft, Meta Platforms, Alphabet and Amazon.com are each expected to deploy tens of billions of dollars in capex for 2025, primarily aimed at AI and cloud infrastructure.
Investors use capex as a signal of future growth. If companies slash spending, it may hint at weaker demand ahead. Conversely, rising capex can show confidence in long-term expansion—even if short-term profits dip.
Still, heavy spending brings risks. Some worry about a spending bubble in AI infrastructure, especially if revenue growth does not follow. Analysts say companies must deliver returns on these capex commitments or risk investor disappointment.
With earnings season underway, capex figures will be under the microscope. Expect significant market reactions based on how companies guide future investments, not just how they performed in the quarter.
