OpenAI’s spending bonanza has Wall Street focused on capex in Big Tech earnings reports
Microsoft CEO Satya Nadella, right, speaks as OpenAI CEO Sam Altman looks on during the OpenAI DevDay event in San Francisco on Nov. 6, 2023.
Justin Sullivan | Getty Images
OpenAI’s head-spinning investments announced in recent months have led to increased scrutiny of the hyperscalers, which are all racing to develop infrastructure for the accelerating artificial intelligence boom.
Investors are about to get a lot of new information to digest.
Microsoft, Alphabet, Meta and Amazon announce quarterly results this week. While they all have very different businesses – and compete in certain areas – Wall Street is going to be laser focused on one particular line item: capital expenditures.
“You’re just seeing this massive commitment on the part of companies to really invest,” said Melissa Otto, head of Visible Alpha Research at S&P Global. “It’s going to be interesting to hear what they have to say about their investment trajectory, if they see this slowing down.”
For almost three years, the market has been swept up in an AI frenzy, as generative AI chatbots like OpenAI’s ChatGPT and Google’s Gemini have shown their power to potentially reshape vast swaths of the economy.
The biggest chokepoint today is a lack of sufficient compute capacity, and not nearly enough power.
AI companies are disclosing plans to build out massive supercomputing data centers, typically based around Nvidia AI chips, to handle the expected load. OpenAI, a privately held company valued at $500 billion, has set itself apart, announcing roughly $1 trillion worth of future infrastructure developments with partners including Nvidia, Oracle and Broadcom.
Aside from OpenAI, the biggest builders include the four internet hyperscalers that are set to post earnings this week. In each case, investors want to see aggressive plans and a clear strategy. But unlike OpenAI, they can’t go too big out of concern that public investors will hammer their stocks.
Morgan Stanley analysts said in a note last week that they expect total hyperscaler capital expenditures to grow 24% next year to nearly $550 billion.
The companies also have to show revenue growth, especially Amazon, Microsoft and Google, which are competing for AI business in their cloud units.
“There are trillions of dollars that are being earmarked to be spent relative to hundreds of billions of dollars of free cash flow generated by the Mag 7,” Impactive Capital co-founder Lauren Taylor Wolfe told CNBC’s “Squawk on the Street” last week, suggesting that companies have yet to see significant returns on investment.
Analysts will be also be looking to see how Microsoft’s Copilot AI features are driving growth in its other businesses. And whether Google’s AI investments are helping it defend its core search and ads business as more consumers turn to ChatGPT for information. Meta has said that its generative AI technology has bolstered the company’s ability to target ads.
The other megacap company reporting this week is Apple. The iPhone maker has thus far been in a separate category in AI because it doesn’t operate a public cloud service or build major large language models that it shares with the public.
However, Apple CEO Tim Cook said in June that the company would be increasing its capital expenditures for AI, so it’s likely to be a bigger topic in Thursday’s earnings report.
Here’s what the hyperscalers have said so far, and what Wall Street is expecting:
Microsoft
Microsoft CEO Satya Nadella speaks at Microsoft Build AI Day in Jakarta, Indonesia, on April 30, 2024.
Adek Berry | AFP | Getty Images
Microsoft said in July that it expected to spend $30 billion in capital expenditures during the quarter, which would represent annual growth of over 50%.
But CFO Amy Hood told investors at the time that while capex would grow in fiscal 2026, which began in July, it would be slower growth than in fiscal 2025.
Analysts expect capex to increase 42% this fiscal year to $91.3 billion, following growth of 45% in the prior year, according to FactSet.
Hood said on the last earnings call that the company faces infrastructure shortages relative to AI demand.
“I talked about it, my gosh, in January, and said I thought we’d be in better supply-demand shape by June,” she said said. “And now I’m saying I hope I’m in better shape by December.”
Alphabet
Google CEO Sundar Pichai gives a thumbs up as he arrives to attend the Artificial Intelligence (AI) Action Summit at the Grand Palais in Paris, France, February 11, 2025.
Benoit Tessier | Reuters
Alphabet said in July that it expected capex of $85 billion this year, up from a previous target of $75 billion.
CFO Anat Ashkenazi told investors at the time that the company planned to raise that figure again in 2026, and that Alphabet monitors demand to make sure the money isn’t wasted.
“We have a highly rigorous process to determine the demand behind it, and then the allocation of the compute associated with our technical infrastructure investments, ensuring that we’re utilizing that appropriately,” Ashkenazi said.
She added that Google’s capital expenditures also support the company’s own products, like Gmail, Google Maps and YouTube, in addition to serving cloud customers and AI lab DeepMind.
Google is likely going to have to add capacity after Anthropic, a major AI lab, said it would reserve as many as 1 million of the company’s TPU AI chips next year, a deal worth tens of billions of dollars.
For 2025, analysts expect capex growth of 57% to $82.4 billion, following growth of 63% last year, according to FactSet. They see growth moderating to 12% next year to $92.6 billion.
Meta
Meta CEO Mark Zuckerberg wears the Meta Ray-Ban Display glasses, as he delivers a speech presenting the new line of smart glasses, during the Meta Connect event at the company’s headquarters in Menlo Park, California, U.S., Sept. 17, 2025.
Carlos Barria | Reuters
Over the summer, Meta boosted the midpoint of its 2025 capex forecast by $1 billion to $69 billion.
Although Meta doesn’t have a cloud service it rents to customers, CEO Mark Zuckerberg has touted the importance of the company’s AI infrastructure as giving it an edge in ad delivery and in creating new kinds of feeds, like its AI-generated video app Vibes.
“We’re making all these investments because we have conviction that superintelligence is going to improve every aspect of what we do,” Zuckerberg said in July.
Zuckerberg has also developed a relationship with Nvidia CEO Jensen Huang, who said at an investor event in October that Facebook used Nvidia chips to create highly successful ad targeting algorithms.
In 2021, Meta’s ad business suffered after Apple implemented a new privacy system that made it harder to target users on mobile devices. Huang said that in figuring out a solution to the problem, Meta “fixed that with AI powered by Nvidia GPUs.”
Analysts surveyed by FactSet expect Meta to show capex expansion this year of 84% to $68.4 billion, accelerating from 37% growth in 2024. They expect 42% growth in 2026 to $97 billion.
Amazon
Amazon CEO Andy Jassy speaks at a company event in New York on Feb. 26, 2025.
Michael Nagle | Bloomberg | Getty Images
Three months ago, Amazon CEO Andy Jassy tried to reassure investors that Amazon Web Services has maintained a “pretty significant” leadership position relative to its cloud rivals and said he feels optimistic about its AI offerings. But Microsoft Azure and Google’s cloud unit have been growing faster.
Amazon plans to spend over $100 billion on capital expenditures this year. It didn’t raise its target in July, but signaled capex of about $31 billion per quarter in the last two periods of the year.
“We will continue to invest more capital in chips, data centers, and power to pursue this unusually large opportunity that we have in generative AI,” CFO Brian Olsavsky told investors.
Olsavsky said much of Amazon’s spending was on the company’s custom AI chip, called Trainium, as well as other technology infrastructure. But he noted that Amazon’s expenditures also support the company’s fulfillment and transportation network that deliver packages to users.
Analysts are calling for 41% capex growth this year to $117 billion, slowing from 57% growth in 2024, according to FactSet. They see growth of about 8% next year to $126.6 billion.
Apple
FILE PHOTO: Formula One F1 – United States Grand Prix – Circuit of the Americas, Austin, Texas, U.S. – October 23, 2022 Tim Cook waves the chequered flag to the race winner Red Bull’s Max Verstappen.
Mike Segar | Reuters
Apple’s spending is a fraction of its rivals.
In fiscal 2024, the company only spent $9.4 billion on capex, or about 2% of overall revenue. That was a decline from the prior year.
For fiscal 2025, which ended in September, analysts expect growth of 28% to $12.1 billion, and they see expansion of 19% to $14.4 billion in 2026.
Apple executives say that because the company’s “hybrid” strategy is to rent much of the computing capacity it needs from cloud providers, those costs become operations expenses.
Cook has signaled that may be changing, though the company doesn’t offer an official guide for future capex.
“We are also significantly growing our investments,” Cook told investors this summer.
CFO Kevin Parekh said, “You are going to continue to see our capex grow,” adding that, “It’s not going to be exponential growth, but it is going to grow substantially.”
WATCH: Notable Capital’s Jeff Richards on capex following demand
Technology
A ‘seismic’ Nvidia shift, AI chip shortages and how it’s threatening to hike gadget prices
The logo of an Apple Store is seen reflected on the glass exterior of a Samsung flagship store in Shanghai, China Monday, Oct. 20, 2025.
Wang Gang | Feature China | Future Publishing | Getty Images
The cost of your smartphone might rise, analysts are warning, as the AI boom clogs up supply chains and a recent change by Nvidia to its products could make it worse.
AI data centers, on which tech giants globally are spending hundreds of billions of dollars, require chips from suppliers, like Nvidia, which relies on many different components and companies to create its coveted graphics processing units.
But other companies like AMD, the hyperscalers like Google and Microsoft, and other component suppliers all rely on this supply chain.
Many parts of the supply chain can’t keep up with demand, and it’s slowing down components that are critical for some of the world’s most popular consumer electronics. Those components are seeing huge spikes in prices, threatening price rises for the end product and could even lead to shortages of some devices.
“We see the rapid increase in demand for AI in data centers driving bottlenecks in many areas,” Peter Hanbury, partner in the technology practice at Bain & Company, told CNBC.
Where is the supply chain clogged?
One of the starkest assessments came from Alibaba CEO Eddie Wu, CEO of Chinese tech giant Alibaba.
Wu, whose company is building its own AI infrastructure and designs its own chips, said last week that there are shortages across semiconductor manufacturers, memory chips and storage devices like hard drives.
“There is a situation of undersupply,” Wu said, adding that the “supply side is going to be a relatively large bottleneck.” He added this could last two to three years.
Bain and Co.’s Hanbury said there are shortages of hard disk drives, or HDDs, which store data. HDDs are used in the data center. These are preferred by hyperscalers,: big companies like Microsoft and Google. But, with HDDs at capacity, these firms have shifted to using solid-state drives, or SSDs, another type of storage device.
However, these SSDs are key components for consumer electronics.
The other big focus is on a type of chip under the umbrella of memory called dynamic random-access memory or DRAM. Nvidia’s chips use high-bandwidth memory which is a type of chip that stacks multiple DRAM semiconductors.
Memory prices have surged as a result of the huge demand and lack of supply. Counterpoint Research said it expects memory prices to rise 30% in the fourth quarter of this year and another 20% in early 2026. Even small imbalances in supply and demand can have major knock on effects on memory pricing. And because of the demand for HBM and GPUs, chipmakers are prioritizing these over other types of semiconductors.
“DRAM is certainly a bottleneck as AI investments continue to feed the imbalance between demand and supply with HBM for AI being prioritized by chipmakers,” MS Hwang, research director at Counterpoint Research, told CNBC.
“Imbalances of 1-2% can trigger sharp price increases and we’re seeing that figure hitting 3% levels at the moment – this is very significant.”
Why are there issues?
Building up capacity in various areas of the semiconductor supply chain can be capital-intensive. And it’s an industry that’s known to be risk-averse and did not add the capacity necessary to meet the projections provided by key industry players, Bain & Co.’s Hanbur said.
“The direct cause of the shortage is the rapid increase in demand for data center chips,” Hanbury said.
“Basically, the suppliers worried the market was too optimistic and they did not want to overbuild very expensive capacity so they did not build to the estimates provided by their customers. Now, the suppliers need to add capacity quickly but as we know, it takes 2-3 years to add semiconductor manufacturing fabs.”
Nvidia at the center
A lot of attention is on Nvidia given it dominates when it comes to the chips that are being put into AI data centers.
It is a huge customer of high bandwidth memory, for example. And its products are manufactured by TSMC which also has other major customers like Apple.
But analysts are focused on a change Nvidia has made to its products that has the potential to add major pressure to consumer electronics supply chains. The U.S. giant is increasingly shifting toward using a type of memory in its products called Low-Power Double Data Rate (LPDDR). This is seen as more power efficient than the previous Double Data Rate, or DDR memory.
The problem is, Nvidia is increasingly using the latest generation of LPDDR memory, which is also used by high-end consumer electronics makers such as Samsung and Apple.
Typically, the industry would just be dealing with demand for this product from a handful of big electronics players. But now Nvidia, which has huge scale, is entering the mix.
“We also see a bigger risk on the horizon is with advanced memory as Nvidia’s recent pivot to LPDDR means they’re a customer on the scale of a major smartphone maker — a seismic shift for the supply chain which can’t easily absorb this scale of demand,” Hwang from Counterpoint Research said.
How AI boom is impacting consumer electronics
Here’s the link between all of this.
From chip manufacturers like TSMC, Intel and Samsung, there is only so much capacity. If there is huge demand for certain types of chips, then these companies will prioritize those, especially from their larger customers. That can lead to shortages of other types of semiconductors elsewhere.
Memory chips, in particular DRAM which has seen prices shoot up, is of particular concern because it’s used in so many devices from smartphones to laptops. And this could lead to price rises in the world’s favorite electronics.
DRAM and storage represent around 10% to 25% of the bill of materials for a typical PC or smartphone, according to Hanbury of Bain & Co. A price increase of 20% to 30% in these components would increase the total bill of materials costs by 5% to 10%.
“In terms of timing, the impact will likely start shortly as component costs are already increasing and likely accelerate into next year,” Hanbury said.
On top of this, there is now demand from players involved in AI data centers like Nvidia, for components that would have typically been used for consumer devices such as LPDDR which adds more demand to a supply constrained market.
If electronics firms can’t get their hands on the components needed for their devices because they’re in short supply or going toward AI data centers, then there could be shortages of the world’s most popular gadgets.
“Beyond the rise in cost there’s a second issue and that’s the inability to secure enough components, which constrains the production of electronic devices,” Counterpoint Research’s Hwang said.
What are tech firms saying?
A number of electronics companies have warned about the impact they are seeing from all of this.
Xiaomi, the third-biggest smartphone vendor globally, said it expects that consumers will see “a sizeable rise in product retail prices,” according to a Reuters reported this month.
Jeff Clark, chief operating officer at Dell, this month said the price rises of components is “unprecedented.”
“We have not seen costs move at the rate that we’ve seen,” Clark said on an earnings call, adding that the pressure is seen across various types of memory chips and storage hard drives.
The unintended consequences
The AI infrastructure players are using similar chips to those being used in consumer electronics. These are often some of the more advanced semiconductors on the market.
But there are legacy chips which are manufactured by the same companies that the AI market is relying on. As these manufacturers shift attention to serving their AI customers, there could be unintended consequences for other industries.
“For example, many other markets depend on the same underlying semiconductor manufacturing capabilities as the data center market” including automobiles, industrials and aerospace and defense, which “will likely see some impact from these price increases as well,” Hanbury said.
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