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Big Tech’s make-or-break week: AI spending meets the moment of truth
Jacob Falkencrone
Global Head of Investment Strategy
Key points:
- Microsoft, Alphabet, Meta, Amazon and Apple report within 48 hours, together representing more than a fifth of the S&P 500.
- Investors are watching whether record AI spending is finally turning into profit rather than just higher capital costs.
- The results will test the strength of cloud demand, ad markets, consumer spending and investor faith in the AI trade.
Five giants, two days, and trillions on the line. Investors are heading into the biggest earnings week of the season looking for proof that the AI boom can finally pay for itself, and set the tone for markets into 2026.
The week that sets 2026
This Wednesday and Thursday will determine whether Big Tech can keep carrying global markets or whether the world’s most valuable companies have started to lose momentum.
Within just 48 hours, Microsoft, Alphabet, Meta, Amazon and Apple will deliver earnings that will shape the direction of the S&P 500, the Nasdaq, and the global equity narrative for the rest of the year.
These companies are more than businesses. They are the heartbeat of the modern economy, powering everything from cloud computing and AI models to smartphones, e-commerce and digital advertising. Yet they now face a single question: is the AI boom creating profits or simply piling up costs?
This is not just another earnings week, it could be the moment that will show whether the AI narrative is still driving earnings or merely expectations. Together, the five companies account for around a fifth of the S&P 500’s total market value and more than half of the Nasdaq 100. A stumble by one could unsettle the whole market, while two or more disappointments could reset investor sentiment heading into year-end.
What’s at stake for investors
For investors, this week goes beyond the usual beats and misses. It offers a window into where growth is really coming from and whether the vast sums being poured into AI infrastructure are beginning to deliver measurable returns.
AI monetisation is the main test. So far, artificial intelligence has been more a cost story than a profit story, with billions spent on servers, chips and data centres. Investors are now looking for clear signs that this investment is starting to translate into revenue through higher pricing, adoption rates or margins.
Cloud growth is another key measure. Microsoft’s Azure, Google Cloud and Amazon’s AWS are the arteries of the AI economy. The pace of their expansion tells us who is winning enterprise budgets and who is sacrificing profitability to stay in the race.
Digital advertising, meanwhile, is a proxy for global consumer confidence. Meta and Alphabet’s results will show whether companies are still spending to reach consumers and whether engagement on platforms such as YouTube and Instagram remains strong.
Apple’s iPhone 17 cycle will give a real-world pulse check on household spending in the United States and China, two markets that still drive global sentiment.
In short, this week will show whether the AI story is finally becoming an earnings story.
Microsoft: the AI operating system
Microsoft reports on 29 October, with Bloomberg consensus at adjusted EPS 3.676 on revenue of USD 75.5 billion. Azure remains the company’s growth engine, and the focus will be on how much of that expansion is AI-driven versus traditional enterprise migration.
Copilot, Microsoft’s AI assistant embedded across Office, Windows and GitHub, is also in the spotlight. Investors are keen to see adoption numbers, attach rates and whether it is starting to lift average revenue per user.
Margins are another watchpoint. The company spent more than USD 30 billion on capex last quarter, and depreciation costs are now biting. The question is whether productivity gains and AI revenue can start to offset the cost curve.
For investors, Microsoft remains the purest way to own the AI economy, but only if that economy starts to deliver meaningful profit.
Alphabet: search stamina and cloud competition
Alphabet also reports on 29 October, with adjusted EPS expected at 2.533 on revenue of USD 85.1 billion. The market will be watching whether the integration of AI into Google Search has altered ad engagement. Google’s new AI-generated Overviews have been controversial, but the company maintains that commercial queries and click-through rates remain stable.
YouTube continues to perform well, benefiting from strong demand for short-form video and connected-TV ads. Google Cloud is expected to post another solid quarter, though investors are focused on its profitability after a period of heavy investment.
Alphabet’s capital expenditure is expected to reach around USD 75 billion this year, second only to Microsoft. The challenge is balancing long-term innovation with near-term returns, a test that will define investor confidence heading into 2026.
Meta: advertising resilience and AI ambition
Meta rounds out Wednesday’s reports, with adjusted EPS forecast at 8.423 on revenue of USD 49.4 billion. The company has delivered a remarkable turnaround in the past year, driven by robust ad demand, better cost control and rising engagement across its platforms.
Now it faces a new challenge: funding an AI transformation that could cost up to USD 65 billion this year without eroding margins. Investors will watch for growth in Reels monetisation and early signs of success in WhatsApp’s new ad formats, which could open a fresh and highly profitable revenue stream.
Reality Labs remains a drag, still losing billions each quarter. But if Meta can sustain its advertising momentum while investing aggressively in AI, it could continue to be one of the market’s strongest performers.
Amazon: cloud momentum and retail margins
Amazon reports on 30 October, with adjusted EPS at 1.979 on revenue of USD 177.8 billion. AWS remains the profit centre of the group, and investors will look for evidence of re-acceleration after several quarters of slower growth relative to Azure and Google Cloud.
Advertising continues to be a bright spot, now generating more than USD 15 billion in quarterly revenue. This has become a crucial offset to thinner margins in retail, where the company’s expansion of same-day delivery and automation is helping to stabilise profits.
Amazon’s ability to manage its investment cycle will be closely watched. With spending on logistics, chips and data centres still heavy, investors are looking for reassurance that cash flow will start improving in 2026.
Apple: consumer pulse and AI rollout
Apple closes the week on 30 October, with adjusted EPS of 1.770 on revenue of USD 102.0 billion. Early signs suggest a strong start for the iPhone 17, particularly in the US and China, where upgrades are running ahead of last year’s pace.
Services revenue from the App Store, subscriptions and iCloud continues to provide stability but faces new regulatory pressures in Europe that could weigh on margins.
Investors will also look for updates on Apple Intelligence, the company’s new AI feature suite. The rollout will be slow, but it represents Apple’s bid to embed artificial intelligence seamlessly into its hardware ecosystem.
Apple does not need to reinvent itself every year, but it does need to show that its ecosystem remains indispensable. This quarter will test whether the company can keep delivering growth without relying on entirely new product lines.
The AI capex paradox
Across all five giants lies the same tension: AI monetisation versus AI investment.
Over the past 18 months, Big Tech has spent hundreds of billions of dollars on chips, servers and data centres. Yet the visible revenue from AI remains relatively small compared with the size of the investment. That imbalance explains why investors are laser-focused on early signs of monetisation, from Copilot subscriptions to AI-driven ad performance and cloud bookings.
So far, markets have rewarded the build-out, assuming that returns will follow. But patience is finite. If capital spending keeps rising faster than cash generation, sentiment could shift quickly. AI has been the easiest story for investors to believe in, but also the hardest to value.
Could this be the turning point?
The debate over whether the AI boom is tipping into bubble territory has intensified. Parallels with the dot-com era are hard to ignore, with soaring valuations, circular deals between hyperscalers and chipmakers, and a growing dependence on debt-fuelled expansion.
The fundamentals for Big Tech remain solid, supported by strong cash flows, healthy margins and fortress-like balance sheets. Yet the sheer scale of AI investment is starting to test even these financial foundations, and the assumption that every dollar of spending will translate into future profit is becoming harder to defend.
According to Goldman Sachs, cumulative AI spending could reach between USD 3 trillion and USD 4 trillion by 2030, while revenues from AI applications still represent only a small fraction of that total. If demand growth fails to catch up, companies risk overbuilding capacity and stretching investor patience.
The jury is still out on whether this is truly a bubble or not, but whatever we call it, the risk is clearly growing. If AI continues to be more about capital expenditure than commercialisation, valuations could start to look increasingly fragile.
Big Tech’s moment of truth
This week is not just about whether Big Tech beats forecasts. It is about whether AI can prove it belongs on the profit line, not just the spending line. Investors should focus on tangible signs of payback, such as margins that hold up, users that pay up, and growth that does not depend on another wave of capital expenditure.
If those numbers appear, the AI trade still has room to run. If they do not, the story shifts. Big Tech’s next challenge will not be scale or innovation, but efficiency and discipline, turning the biggest investment boom in modern capitalism into something that consistently earns its keep.
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