Have hyperscalers lost the plot? After racking up phenomenal gains for a long time, soaring AI spending bills are coming back to bite them in 2026!
Check out the MoneyShow Chart of the Day here. It shows the three-month performance of leading AI stocks like Alphabet Inc. (GOOGL), Meta Platforms Inc. (META), Amazon.com Inc. (AMZN), Oracle Corp. (ORCL), and Microsoft Corp. (MSFT). You can see they’ve all lost ground since April, with Oracle down a sizable 31.6%.
GOOGL, META, AMZN, ORCL, MSFT (3-Mo. % Change)
Data by YCharts
Staggering capex costs are the culprit here. UBS recently estimated the major hyperscalers would shell out $673 billion in 2026, up 76% year-over-year. That number could rise another 25% in 2027.
But those figures could prove too low. Alphabet just raised its 2026 capex estimate by $15 billion to as much as $205 billion when it reported second-quarter results. FactSet just released a report saying the total could hit $800 billion, a figure so high the companies won’t be able to cover it with cash flow. That’s forcing them to raise money by selling equity or debt – and weighing on hyperscaler stocks.
Investors have long been willing to give tech companies the benefit of the doubt. They’ve bought into the idea that massive spending now will deliver powerful sales and earnings growth later. That, in turn, has allowed companies to continue to raise capital.
But IF the shorter-term pullback turns into a longer-term selloff, things could get dicey. Not just for AI and tech stocks, but the markets overall. Stay tuned!
