Meta tanks 10%, Alphabet climbs 5% as each company raises capex spend

AlphabetIts shares rose more than 5 percent on Thursday Meta Shares fell 10% as investors digested first-quarter earnings results, which included plans to increase AI spending.

It’s on track to be Meta’s worst day since October 2025 and Alphabet’s best day since November 2025.

The diverging stock movements suggest Wall Street isn’t guaranteed to applaud every tech company’s AI spending spree.

“The market has been less unified on what spending plans will do, with investors still trying to balance the scale of the AI ​​opportunity with the cash needed to pursue it,” Matt Britzman, an analyst at Hargreaves Lansdown, wrote in a research note on Thursday. “But the bigger takeaway is that this cycle is nowhere near cooling.”

Alphabet beat analysts’ estimates for first-quarter revenue, helped by the rapid development of its Google Cloud business, which posted a 63% increase in revenue from a year ago. Google CEO Sundar Pichai said cloud growth is driven by demand for enterprise AI solutions.

The company revised its capital spending forecast this year to between $180 billion and $190 billion, up from $175 billion to $185 billion.

Meta beat Wall Street expectations for earnings and revenue in the first quarter, but its daily active head count (DAP) fell from quarter to quarter due to “internet outages in Iran.”

The company increased its capex plans for this year to a range of $125 billion to $145 billion, compared to the previous range of $115 billion to $135 billion; The company said the move “reflects our expectations for higher component pricing this year and, to a lesser extent, additional data center costs to support capacity next year.”

On a conference call with investors, Pichai said Alphabet is seeing “tremendous” demand for its AI tools and custom chips. He added that AI “is illuminating every part of the business.”

Meta executives have tried to justify the company’s higher AI spending by saying it is necessary to “meet our infrastructure needs” and capture future growth while strengthening its core online advertising business.

Unlike the alphabet, Microsoft And AmazonMeta, which all have massive cloud infrastructure businesses that allow them to monetize their AI investments, has no such offering, making it difficult to prove it can deliver returns.

Microsoft raises its capital spending forecast to $190 billion for all of 2026; $25 billion of this figure reflects high component prices. Amazon has maintained its previously announced capex budget for the year, which is expected to reach $200 billion; This is more than other megacap technology peers.

Concerns about Meta’s AI spending led JPMorgan analysts to downgrade the stock from overweight to neutral on Thursday.

Analysts wrote that Meta faces a “challenging path” to generating returns on its heavy capex forecast, especially as hyperscalers continue to “leverage deep enterprise technology stack integrations, silicon supply, and model diversity.”

“Overall, we are looking for greater clarity on the path to returns on AI spend beyond the core advertising business and believe it will take time to build, iterate, scale and monetize new products and experiences,” JPMorgan analysts wrote. he said.

— CNBC’s Jennifer Elias and Jonathan Vanian contributed to this article.