Big Tech Leans on Legacy Businesses to Fund Its AI Spending as Investors Push Back

In brief

• Big Tech companies are funding heavy AI infrastructure spending with cash from older businesses such as online advertising.
• Capital spending plans for 2026 from five companies total as much as $828 billion.
• Microsoft is the only one of the group with positive free cash flow, though it declined sharply again.
• Alphabet fell about 12% on Thursday, and a Friday selloff erased about $1 trillion in market value.

Core businesses fund AI spending

The largest technology companies are betting that their AI infrastructure will eventually produce years of profitable growth. For now, they rely on existing operations such as online advertising to fund that spending (Tech giants need legacy businesses to keep growing as they pour trillions into the AI buildout – CNBC). Microsoft is the only member of the group still generating positive free cash flow, and even its figure fell sharply for a second straight quarter.

Spending is outpacing cash

Capital spending plans for 2026 from Amazon, Alphabet, Microsoft, Meta and Musk's SpaceX, which contains xAI, add up to as much as $828 billion (Fears over $828 billion AI capex spending spree help erase $1 trillion in market value – Fortune). In the third quarter, Alphabet posted a larger cash shortfall and, like Meta and Amazon, raised its spending plans (AI boom hits a wall on Wall Street as OpenAI cuts fundraising target while Meta gets a credit warning over its cash flow, spending and monetization – Fortune).

2026 capex plans by company

• Amazon: $220 billion
• Alphabet: up to $205 billion
• Microsoft: approximately $170 billion
• Meta: up to $145 billion
• SpaceX: up to $88 billion

Markets react to the spending

Investors punished the group during earnings season over doubts about whether these investments will pay off. Alphabet fell about 12% on Thursday, its worst day on record.