Why all eyes are on AI spending at Microsoft and Amazon

Alex Halverson, The Seattle Times on Apr 28, 2026

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Wednesday will be a busy day on Wall Street.

Just after the closing bell at 1 p.m. Pacific Time, four tech industry titans — Microsoft, Amazon, Meta and Google parent Alphabet — will report financial results for the first three months of the year. Though the companies each have different sets of revenue sources, sales growth among the cloud divisions of Microsoft, Amazon and Google will be in the spotlight for analysts.

As the industry continues to pour hundreds of billions of dollars into artificial intelligence investments, cloud computing revenue is where investors will be able to see if the bets are starting to pay off. If trends from previous earnings reports persist, Wall Street will also have a watchful eye on those rising AI costs.

Those costs have exploded over the past year for most of the industry. To keep up with purported demand, companies like Amazon and Microsoft have drastically increased capital expenditures — money spent on AI infrastructure like data centers and computer chips — compared to previous years. And they're not showing signs of slowing.

Microsoft, which spent $88 billion in capital expenditures for its 2025 fiscal year, is well on its way to breeze past $100 billion this fiscal year, which ends on June 30. In the first two quarters, Microsoft already reported about $72 billion in AI investment costs.

Amazon projects roughly $200 billion in capital expenditure costs this calendar year, a figure much higher than what Wall Street estimated going into the year.

Microsoft's financial results on Wednesday come from the third quarter of its 2026 fiscal year, which should give a better indication for how much it's tracking to spend on AI for the full year. Microsoft CFO Amy Hood said in January, during the company's previous earning call with analysts, that capital expenditure costs should slowly decrease over the coming quarters. However, those costs will still be much higher than in past quarters.

Ultimately, analysts are looking for signs that the red-hot spending will cool and tech companies will see an increased return on AI investment.

Wall Street expects Microsoft to have a strong quarter in both revenue and profit, with the average revenue estimate at $81.4 billion. That would represent more than 16% year-over-year growth.

Microsoft has regularly beat Wall Street estimates over the past few years and has been rewarded for it. But as analysts look past the billions in profit each quarter and eye rising costs, the company's stock price has suffered lately.

During its most recent earnings call, Microsoft was pressed on the falling stock price, despite another strong quarter. Earnings grew 24% year-over-year for the last three months of 2025, but Microsoft's share price fell by 10% afterward.

I think one of the core issues that is weighing on investors is (capital expenditures) is growing faster than we expected, and maybe Azure is growing a little bit slower than we expected," said Keith Weiss, an analyst with Morgan Stanley, on the January earnings call. "And I think that fundamentally comes down to a concern on the (return on investment) on this capex spend over time."

Hood defended both Microsoft's spending and the revenue for the Azure cloud computing platform, saying that AI investments will show up across different platforms, including its own products like Copilot.

But as Microsoft reports earnings the same day as Amazon this week, investors will be able to instantly compare cloud revenue growth between the companies and their competitor, Google. Since Microsoft now directly breaks out Azure revenue, that comparison could win or lose them some favor on Wall Street.

Less than a year ago, cloud revenue growth was a big win for Microsoft during the same week that investors hounded Amazon over Amazon Web Services' cloud sales.

In late July, Microsoft reported 39% year-over-year revenue growth for Azure for the months of April through June. The stock price shot up and the following day Amazon reported 18% growth for AWS. Amazon's stock price fell by more than 6% in after-hours trading and losses continued the next day.

Amid questions over underwhelming cloud growth, Amazon CEO Andy Jassy said the market share of AWS put it at a disadvantage. Jassy didn't name other companies, but said AWS was a "meaningfully larger business" than its competitors and that the "second player is about 65% the size of AWS."

Amazon hasn't backed down from spending either. In the company's recent letter to shareholders, Jassy gave a full-throated defense of the projected AI investment costs for the year, saying the company wasn't spending $200 billion "on a hunch.

The stock prices have since taken opposite paths as Wall Street seems to have higher scrutiny over Microsoft's capital expenditures than Amazon's. Since that late July earnings call with Amazon, the company's share price has risen by 11%. Microsoft's is down 20% since then.

When investors and analysts get the fresh figures on Wednesday, it may not be enough for the companies to beat revenue estimates. Wall Street wants to see meaningful cloud growth and may have an eyebrow raised at investment costs.