GOOGL, MSFT and META Reiterate Enormous Spending in AI Infrastructure

The artificial intelligence (AI) saga, supported by the massive growth of cloud computing and data centers, is yet to unfold fully. The momentum of the AI infrastructure segment is in top gear this year. The AI space remains rock solid supported by highly bullish demand scenario. Research firm McKinsey & Co. estimated that global AI-powered data center infrastructure capex will reach around $7 trillion by 2030.

This trend has been reconfirmed by three “magnificent 7” stocks — Alphabet Inc. GOOGL, Microsoft Corp. MSFT and Meta Platforms Inc. META. All three tech giants reported their latest earnings results yesterday after the closing bell.  

The chart below shows the price performance of our three picks year to date.

Alphabet Inc.

Alphabet came up with third-quarter 2025 earnings of adjusted $2.87 per share, beating the Zacks Consensus Estimate of $2.26 per share. This compares to earnings of $2.12 per share a year ago. The company posted quarterly revenues of $87.47 billion, surpassing the Zacks Consensus Estimate by 2.95%. This compares to year-ago revenues of $74.55 billion.

This impressive performance was primarily attributed to excellent momentum in its AI-powered cloud businesses. As a result, GOOGL raised its 2025 capex for the second time in the range of $91-93 billion. Earlier, capex for 2025 was raised to $85 billion from $75 billion estimated for the first time. Moreover, management said that its planned capital expenditure for an AI-powered data center in 2026 will see significant increase year over year.

AI-powered cloud revenue increased 32% year over year to $15.16 billion. Alphabet ended the third quarter with a massive cloud-computing backlog of $155 billion. The company’s flagship AI app Gemini 2.5 had more than 650 million monthly active users at the end of the reported quarter compared with 450 million users in the prior quarter.

GOOGL’s AI-induced search engine generated $56.56 billion in quarterly revenues, up 15% year over year. Its innovative AI Mode product, which is inbuilt in the search engine, had 75 million daily active users in the United States at the end of the reported quarter.

Zacks Rank #3 (Hold) Alphabet has an expected revenue and earnings growth rate of 12.5% and 7.7%, respectively, for next year. The Zacks Consensus Estimate for next-year earnings has improved 0.1% over the last seven days. GOOGL has a long-term (3-5 years) earnings growth rate of 14.9%, higher than the S&P 500’s growth rate of 13.5%. 

Microsoft Corp. 

Microsoft reported first-quarter fiscal 2026 earnings of adjusted $4.13 per share, beating the Zacks Consensus Estimate of $3.65 per share. This compares to earnings of $3.30 per share a year ago. The company posted quarterly revenues of $77.67 billion, surpassing the Zacks Consensus Estimate by 3.62%. This compares to year-ago revenues of $65.59 billion.

MSFT’s intelligent cloud business generated $30.9 billion in revenues, up 28.3% year over year. The company’s flagship Azure product, which is a part of this business, witnessed 40% year-over-year growth in revenues. 

Consequently, MSFT’s capex in the first quarter was $34.9 billion, a large part of which was invested in AI-powered data center infrastructure developments. Management said its capex growth rate for fiscal 2026 will exceed that of fiscal 2025. 

Zacks Rank #3 Microsoft has an expected revenue and earnings growth rate of 14% and 12.9%, respectively, for the current year (ending June 2026). The Zacks Consensus Estimate for current-year earnings has improved 0.1% over the last 30 days. MSFT has a long-term earnings growth rate of 14.9%, higher than the S&P 500’s growth rate of 13.5%. 

Meta Platforms Inc. 

Meta Platforms reported third-quarter 2025 earnings of adjusted $7.25 per share, beating the Zacks Consensus Estimate of $6.61 per share. This compares to earnings of $6.03 per share a year ago. The company posted quarterly revenues of $51.24 billion, surpassing the Zacks Consensus Estimate by 3.63%. This compares to year-ago revenues of $40.59 billion.

META generated AI-induced advertising revenues of $50.08 billion in the reported quarter, up 25.6% year over year. Family daily active people were 3.54 billion. Average Revenue Per Person was $14.46.

In 2025, META invested heavily to overhaul its AI businesses after the not-so-impressive launch of its open-source Llama 4 software in April. Management raised its 2025 capex expenditure to $116 - $118 billion from the previous range of $114 - $118 billion. 

CNBC reported that META’s CEO Mark Zuckerberg said the company consistently requires more computing power for its AI initiatives, resulting in more spending on related data center and cloud services. META currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. 

Meta Platforms has an expected revenue and earnings growth rate of 16.3% and 6.3%, respectively, for next year. The Zacks Consensus Estimate for next-year earnings has improved 0.5% over the last seven days. META has a long-term earnings growth rate of 16.7%, higher than the S&P 500’s growth rate of 13.5%. 

Bottom Line

This huge spending on AI infrastructure will dramatically change the world over the next five years in fields such as hyperscale automation, robotics, healthcare, energy, materials, financials and cybersecurity. 

Major beneficiaries will be AI-powered data center chipset developers and other original equipment manufacturers. Moreover, the energy-hungry AI space has made nuclear energy one of the hottest industries on Wall Street over the past year. Nuclear energy is increasingly recognized as a key solution to meeting rising global electricity demand and shifting toward cleaner energy sources.

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This article originally published on Zacks Investment Research (zacks.com).

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