On a single Wednesday evening on 29 April, Alphabet, Amazon, Meta and Microsoft all topped Wall Street revenue forecasts and used the same earnings calls to push their 2026 AI capital spending plans even higher. Combined capex across the four hyperscalers is now on track to approach $700B this year, up from roughly $200B in 2024 and the largest single-year infrastructure surge in tech history.
The results made the AI tailwind impossible to ignore. Alphabet posted Q1 net income of $62.6B and 63% year-over-year growth in Google Cloud. Amazon delivered $181.5B in net sales and EPS of $2.78 against a $1.62 estimate. Meta revenue hit $56.3B with EPS of $10.44 versus a $6.67 consensus. Microsoft fiscal Q3 revenue reached $82.9B, with the company saying its AI business is now running at a $37B annualised rate, up 123% year over year.
But spending is the real headline. Amazon is on track for around $200B of capex in 2026 (most for data centres), Alphabet $175 to $185B, Meta $115 to $135B, Microsoft $120B+ and Oracle $50B. Investors did not all cheer: Meta dropped 6% after-hours on its raised capex guidance and Microsoft also slipped on AI buildout costs, while Alphabet and Amazon rose on cloud strength. Power, cooling and interconnect, executives said, are now the bottleneck this $700B is trying to break.
This is the week the AI build-out went from “big” to “openly historic”. Combined hyperscaler capex tripled in 24 months, but the gap between capex and AI revenue keeps widening. Microsoft is the only player whose disclosed AI run rate ($37B, up 123%) is even close to consistent with its $120B+ capex. Meta and Amazon still have to back-fit AI revenue into their numbers. The market read the gap on the night: Meta and Microsoft sold off after-hours, Alphabet and Amazon rallied. The four-name AI trade is splitting in real time.
For enterprises, the practical implication is that compute is now the binding constraint on every AI strategy you read about. Microsoft openly admits Azure AI is capacity-bound. OpenAI hit its 10GW Stargate target three years ahead of schedule and is already evaluating new sites. SoftBank is preparing a $100B IPO for Roze, a venture that exists to let robots build data centres faster. Capex commitments by 2030 will only make sense if AI revenue compounds another order of magnitude from here.
The bottom line: $700B is the real story of this earnings week, and it is now the lens through which to read every other 2026 AI announcement. Watch Q2 prints in late July. If Azure, Google Cloud and AWS all keep growing 30 to 60%, the spend looks rational. If not, expect louder questions about overbuild and a sharper Wall Street split between the four names.
The capex curve and the layoff curve have officially become the same curve. Every flagship story this week (hyperscaler capex, Microsoft’s $37B AI run rate, OpenAI hitting its 10GW Stargate target three years early, SoftBank’s $100B Roze IPO plan, Microsoft 365 E7 going GA on 1 May) is the same story told from a different angle. The four largest software companies in the world, plus a handful of would-be peers, are committing capital at a pace that only makes sense if AI revenue grows another order of magnitude from here.
Meanwhile, real workforces are being reshaped underneath, with 80,000 cuts in Q1 and almost half explicitly blamed on AI, and Chinese labs are responding with price wars rather than spend wars. DeepSeek’s 75% V4-Pro discount through 5 May is not just a launch promo. It is a deliberate signal that the open-source frontier intends to compete on cost, not on capex. The next 12 months will tell us which curve breaks first: Western capex commitments, or the labour pyramid underneath them.
Cursor, GitHub Copilot, Claude Code and Replit dominate the inner loop where developers actually write code. But every CIO will tell you the inner loop is the cheap part of software. The expensive parts (release management, environment provisioning, governance, audit, mainframe modernisation) sit further out, in the SDLC, and almost no AI tool has tried to claim them as a single workflow. Bob is the first major attempt to move the value pool out to “AI-assisted delivery”, and the framing matters because it changes who buys the tool: not the developer, but procurement, security and platform teams.
The strategic read is that this is the same playbook IBM ran with Red Hat and watsonx: build for the regulated enterprise that the cool startups are still figuring out how to sell into. Watch closely for Cursor, GitHub and Anthropic to add governance and delivery framing to their roadmaps inside the quarter. The Cursor SDK on 29 April was a first move in that direction. Expect more.
Read IBM Bob β