Big Tech Capex Scorecard: Amazon Spends Over $77B In One Quarter — How It Stacks Up With MSFT, TSLA, GOOGL
Yahoo Finance ·
Tesla posts the largest jump in capex from the prior quarter, up 88% to $4.7 billion.Amazon spent about $20 billion more than expected in Q3.Amazon and Alphabet keep their full-year spending forecasts, while Microsoft and Tesla lower theirs.Amazon.com, Inc.’s (AMZN) capital expenditure soared to $77.3 billion last quarter, more than expected, pushing its stock lower and reviving worries about whether Big Tech's AI spending will translate into meaningful returns.The figure rose 43% sequentially and was $20 billion higher than expectations from analysts polled by LSEG-Reuters. That led Amazon to report a $7.6 billion cash burn in the quarter, compared with $14.8 billion generated in Q3 of last year.Like competitors, Amazon is spending record sums on AI development and infrastructure, forecasting $220 billion in capital expenditures this year. Amazon and Google parent Alphabet maintained their full-year spending expectations, though Microsoft lowered its own to $170 billion from $175 billion. Tesla cut its annual forecast to about $20 billion from about $25 billion, even as its quarterly capex jumped 88% to $4.7 billion. CompanyLast Quarter CapExQ/Q GrowthFY CapEx TargetAmazon$77.3 billion43%$220 billionMicrosoft $45.2 billion10%$170 billionAlphabet$51.4 billion15%$200 billion Tesla$4.7 billion88%$20 billion Big Tech CapEx Central To AI Bubble FearsBig Tech’s incredible spending is flowing to dozens of semiconductor and AI infrastructure firms, bringing them record sales and profits and propping up their valuations. Market euphoria rests largely on two assumptions: that Big Tech will continue ramping up spending and that cloud demand, already at record levels, will keep growing as the AI market matures.However, signs of stress are emerging. Tech and AI infrastructure stocks have fallen sharply over the past month, with the Invesco QQQ Trust Series 1 (QQQ) down 3.3% and the iShares Semiconductor ETF (SOXX) down 9.6%. The pullback suggests some investors believe the AI-led gains have peaked.Quarterly results from Apple and Nvidia in the coming weeks will offer more clues on the CapEx math.Amazon Defends Record SpendingWhile saying the 2027 capex would be “meaningfully more” than the current year’s figure, Amazon CEO Andy Jassy sought to defend the incessant spending."Overall demand for AWS capacity remains exceptionally strong,” Jassy said on the analyst call on Thursday. “Enterprises are still very early in using inference at scale, and yet inference already accounts for well over half of AWS' AI revenue and growing.”He said there was a “clear line of sight to attractive financial returns.” Elaborating on the AWS growth potential, Jassy said that “we have even more conviction than we already had that the investment we're making in AWS will yield a much larger revenue and free cash flow generating business than we would have imagined a couple of years ago with strong return on invested capital." AMZN Stock: Q3 Recap, Retail View Amazon’s third-quarter revenue rose 12% to $201.9 billion, and net income was $20.7 billion. Both were below estimates from analysts polled by FactSet. Sales at Amazon Web Services rose 39% to $46 billion, while e-commerce sales rose 2% to $68.5 billion.The company's Q4 revenue was between $240 billion and $247 billion, and operating income between $28.5 billion and $33.5 billion.On Stocktwits, retail sentiment for AMZN turned ‘extremely bullish’ from ‘bullish’ the previous day. The sentiment was ‘extremely bullish’ for TSLA, ‘bullish’ for MSFT, and ‘bearish’ for TSLA.A trader posted: “$AMZN so it looks like the market thinks AI is a bubble or a fad and that these geniuses that built and run the best companies in history are wrong about their capex spending. There’s a long history of smart people gaining wealth and stupid panic sellers going nowhere. This will simply be another example.”For updates and corrections, email newsroom[at]stocktwits[dot]com.Read Next: SNDK Tumbles Amid Tech Selloff Despite Upbeat Q1 Report; Retail Turns Bullish
DYAX Investor Sentiment
Bullish (Long) 29% · Bearish (Short) 71%
413 participants
Related News
- Nov. 2 Could Be a Big Day for Apple Stock
- Stock Market: Will S&P 500 Open Up or Down Today?
- Sumitomo Electric (5802 JT) H1 (JPY) net 159.4bln (exp. 97.9bln Y/Y), rev. 2.76tln (prev. 2.37tln Y/Y)
- ‘This Is a Knife Fight:’ Inside China’s Ruthless EV Blitz Upending the World
- Stocktwits Space Race Monthly: SPCX Holds Up Better Than ASTS, RKLB And PL In October — But VSAT Takes The Crown
- Apple supplier Luxshare falls as Q3 profit growth slows; 9M profit misses forecast
