Google-parent Alphabet, Microsoft, Meta and Amazon are collectively expected to invest nearly $700 billion into capital expenditure in 2026. As reported by CNBC, this three-digit number has unsettled the analysts and investors. The spending surge represents an increase of 60% from the previous year (2025). This large investment underscores the sale of the AI arms race and it also raises concerns about cash flow and profitability in the near future.As per the CNBC report, this bulk investment from the tech giants will be directed towards high-priced chips, sprawling data centers and advanced networking technology needed to power AI models and cloud services. Amazon has revealed the most aggressive plan, forecasting around $200 billion in apex. On the other hand, Alphabet is close behind with up to $185 billion this year. Microsoft and Meta are also pretty close and together the tech giants are investing around $700 billion this year in AI.

The pressure of cash flow

This spending spree from Google, Microsoft, Meta and Amazon comes at a cost. The four companies generated a free cash flow of $200 billion in 2025 which is down from $237 billion in 2024. The analysts are now expecting a much shorter decline in this number. Amazon has projected to run negative free cash flow of $17 to $18 billion in 2026, whereas Alphabet has already turned debt markets raising $25 billion in bonds last November as its long-term debt has quadrupled to $46.5 billion.As per the report, the investors have now responded with caution. Amazon’s shares fell almost 6% on Friday, extending its year-to-date decline to 9%. Microsoft has dropped 17% this year, the steepest among the group, while Alphabet and Meta have managed slight gains. The mixed performance reflects both optimism about long-term AI growth and anxiety over near-term financial strain.Wall Street analysts argue that the upfront investments are necessary to secure dominance in AI, but the short-term impact is clear: margin pressures, reduced cash generation, and reliance on debt and equity markets. Morgan Stanley’s Brian Nowak told CNBC that Alphabet’s spending could climb even higher, projecting $250 billion by 2027.