SAN FRANCISCO — Alphabet shares rose 0.6 percent to $319.74, signaling investor approval for its plan to increase capital expenditure on artificial intelligence infrastructure and cloud services. The move deepens the spending race among the largest technology firms.
Meta Platforms fell 1.8 percent to $595.19 as investors continued to scrutinize its AI spending commitments, which analysts estimate could reach $60 billion over the next two years. Markets want clearer evidence that the capital outlays will produce profitable returns.
The diverging stock reactions reflect a broader investor focus on capital allocation across the sector. Microsoft and Amazon are expected to detail their own AI spending plans in upcoming earnings reports, with analysts watching for the effect on cloud margins.
Jeff Marks, Club portfolio director, said Friday that capex trends are "going to be the number one focus" for upcoming Big Tech earnings. The comment reflects investor demand for clarity on how multi-billion dollar AI infrastructure projects translate into profitable new services and competitive advantages.
Building frontier AI models and supporting enterprise-grade AI services requires heavy investment in specialized hardware, primarily GPUs. The cost of acquiring and deploying compute resources can reach hundreds of millions of dollars for a single advanced model, creating a significant barrier to entry for the few companies able to finance such efforts.
Alphabet and its peers are betting that early, aggressive investment will secure long-term market share in a fast-growing AI market. The ability to integrate advanced AI into core products and cloud services will determine future revenue streams — and whether today's capital spending justifies current valuations.
