Four of the biggest tech companies reported earnings after the closing bell Wednesday, and markets finished lower as investors weighed heavy AI spending against near‑term returns.
Meta and Microsoft fell, while Amazon and Alphabet ended the session higher, according to a pre‑earnings heat map of the top 500 stocks. But the dominant story from the reports was capital expenditure on AI infrastructure. Each of the companies is spending hundreds of billions — in many cases more than $100 billion this year — to build AI data centers and buy servers.
Adam Levine, senior tech reporter at Barron’s, told CBS News that investors are no longer satisfied just with beats on sales or earnings. “They’re spending hundreds of billions,” he said. “Investors want to know where the return on that investment is going to come from.” That pressure is driving scrutiny of cash flow and capital allocation.
Google stood out for its cloud unit performance: cloud sales grew roughly 63% and operating profit jumped, with operating margins improving. That strength can offset near‑term capex for some investors, Levine noted. But the spending is already cutting into free cash flow: Amazon showed negative free cash flow, and both Google and Meta paused share buybacks this quarter because of the cash outlays.
Levine warned the debate will persist: companies will keep spending on AI, but the market will keep asking when and how those investments pay off — quarter after quarter.