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Wall Street is growing increasingly divided over AI's winners and losers after the world's largest technology companies reported earnings and affirmed or raised their capex forecasts, suggesting the spending spree isn't letting up yet.
Nearly $2 trillion has moved this week into or out of the six megacaps that have reported earnings this season so far. The three biggest hyperscalers, Amazon, Microsoft and Alphabet, have all seen their market caps surge after posting strong cloud growth. It suggests that investors believe returns may be in sight after the companies committed to spend billions on AI.
Microsoft gained over $600 billion in market cap this week, while Amazon and Alphabet both added more than $400 billion.
On the other end, Meta has seen its stock plunge after earnings, as investors weren't sold on its AI investment strategy, erasing about $85 billion from its market cap this week. Apple suffered a steeper drop, losing more than $350 billion in market value, as the memory shortage weighed on its outlook. Tesla lost about $7 billion in market value after it went cash flow negative and forecast higher spending.
AI spending among the megacaps is "trending" toward almost $800 billion over the next 12 months, Jason Greenberg, co-head of global tech, media and telecom investment banking at Jefferies, told CNBC's "Squawk on the Street" on Friday.
Investors no longer question whether people are adopting AI, or if there's real demand for chips and compute capacity, Greenberg said.
"It's whether in the long term demand is going to be sufficiently profitable to warrant all of this investment," Greenberg said. "I think overall that's the real issue that we're struggling with right now."
Apple's earnings, revenue and iPhone sales were all above market expectations; however, the company issued weak guidance for the current quarter, citing "supply constraints." Apple said revenue growth in the current quarter will be between 9% and 11%, missing analysts' expectations for 12% growth, according to LSEG.
Apple shares closed more than 7% lower on Friday.
The company is grappling with a huge shortage of memory, a key component in its devices, as well as competition for chip manufacturing capacity.
This has led Apple to raise prices on the Mac and iPad, and analysts expect an iPhone price rise to come this year.
Amazon, meanwhile, said revenue at its cloud computing business jumped 37% year-on-year in the second quarter, marking the strongest expansion since 2021. Its Amazon Web Services business is closely watched by the market, as this is where the company books most of its sales related to AI. Investors monitor this unit as an indication of the demand Amazon is seeing for its AI products.
Amazon shares closed more than 15% higher on Friday as the company forecast its capital expenditures to hit $220 billion this year, up from a prior forecast of $200 billion, as it continues to invest in AI infrastructure.
Investors have been scrutinizing spending from Big Tech on AI as concerns grow that these companies are spending ahead of demand. But Amazon's own cloud growth appeared to justify the company's capex.
AWS's strong growth "is a clear indicator that its infrastructure investments are meeting market demand rather than outpacing it," Tracy Woo, principal analyst at Forrester, said in a note on Thursday.
Amazon's stock has been a laggard in 2026 and is up around 4% year-to-date. Apple, meanwhile, has risen 23% across the same period. The iPhone maker is partly seen as an alternative trade to the tech players who have been spending heavily, as Apple has not gone on a huge capex expansion journey.
Investors appear to be picking their AI winners during this earnings season, with the stock price moves of tech giants diverging.
On Thursday, Meta sank 8% while Microsoft rallied 15% as investors took a different view on both companies' AI strategies.
Meta pushed up the low end of its 2026 guidance range on capital spending, but the social networking company's co-founder and CEO didn't provide much clear information on cloud demand for the company's AI infrastructure.
"I think there's there's a rising impatience, especially on Meta," said Hendi Susanto, portfolio manager at Gabelli, which held stakes in Meta and other large-cap tech companies at the end of March. "I think Mark Zuckerberg insists that, yeah, they are considering that alternative, but in the absence of confirmation during the earnings call, investors did take that negatively."
— CNBC's Jordan Novet and Kif Leswing contributed to this report.
Apple and Amazon shares this year.
