Google CEO Sundar Pichai arrives at the US Senate bipartisan Artificial Intelligence (AI) Insight Forum at the US Capitol in Washington, DC, on September 13, 2023.
Nathan Howard Getty Images
AlphabetsThe stock rose more than 5% on Thursday, while Meta shares fell 10%, as investors digested first-quarter earnings results, which included plans to increase spending on artificial intelligence.
It is shaping up to be Meta’s worst day since October 2025 and Alphabet’s best day since November 2025.
The stock’s volatility shows that Wall Street isn’t guaranteed to applaud the AI tech company’s entire investment.
“The market has had little consensus on what to do with spending plans, as investors are still trying to weigh the scale of AI’s opportunity versus the money needed to pursue it,” wrote Matt Britzman, an analyst at Hargreaves Lansdown, in a Thursday research note. “But the biggest thing is that this cycle is not even close to cooling.”
Alphabet beat analysts’ estimates with first-quarter revenue, helped by its booming Google Cloud business, which recorded a 63% increase in revenue from a year ago. Google CEO Sundar Pichai said cloud growth is driven by demand for AI business solutions.
The company revised its forecast for capital spending this year to between $180 billion and $190 billion, from its previous estimate of $175 billion to $185 billion.
Meta beat Wall Street’s expectations for profit and revenue in the first quarter, although its daily active people, or DAP, were dragged down quarter after quarter by “internet disruptions in Iran.”
The company raised its capex plans for the year to $125 billion and $145 billion, compared to its previous range of $115 billion to $135 billion, a move the company said, “reflecting our expectations for higher prices this year, and to a lesser extent, additional data center costs to support next year’s capacity.”
In a conference call with investors, Photosi said Alphabet sees “huge” demand for AI tools and custom chips. AI is “lighting up every part of the business,” he added.
Meta executives are looking to justify the company’s big AI spending, saying it is necessary to “meet our infrastructure needs” and capture future growth, while strengthening the core of the online ad business.
Unlike Alphabet, Microsoft again Amazonall have large cloud infrastructure businesses that enable them to turn their AI investments into revenue, Meta has no such offering, making it difficult to prove it can bring benefits.
Microsoft raised its capital spending forecast to $190 billion through 2026, with $25 billion of that figure reflecting higher prices. Amazon is holding to its previously announced capex budget for the year, which is expected to reach $200 billion, more than any of its megacap tech peers.
Concerns about Meta’s AI use prompted JPMorgan analysts to downgrade the stock on Thursday to neutral from overweight.
Meta faces a “challenging path” to generating returns on its capex-heavy forecast, especially as hyperscalers continue to “benefit from a combination of deep business stacks, silicon offerings and model diversification,” the analysts wrote.
“Overall, we see more clarity on the return on AI applied beyond the core ad business, and we believe that building, replicating, scaling and monetizing new products and experiences will take time,” JPMorgan analysts said.
— CNBC’s Jennifer Elias and Jonathan Vanian contributed to this article.
Alphabet, Meta, Microsoft and Amazon one day stock chart.
