Wednesday will be a busy day on Wall Street.<\/p>\n
Just after the closing bell at 1 p.m. Pacific Time, four tech industry titans \u2014 Microsoft, Amazon, Meta and Google parent Alphabet \u2014 will report financial results for the first three months of the year. Though the companies each have different sets of revenue sources, sales growth among the cloud divisions of Microsoft, Amazon and Google will be in the spotlight for analysts.<\/p>\n
As the industry continues to pour hundreds of billions of dollars into artificial intelligence investments, cloud computing revenue is where investors will be able to see if the bets are starting to pay off. If trends from previous earnings reports persist, Wall Street will also have a watchful eye on those rising AI costs.<\/p>\n
Those costs have exploded over the past year for most of the industry. To keep up with purported demand, companies like Amazon and Microsoft have drastically increased capital expenditures \u2014 money spent on AI infrastructure like data centers and computer chips \u2014 compared to previous years. And they\u2019re not showing signs of slowing.<\/p>\n
Microsoft, which spent $88 billion in capital expenditures for its 2025 fiscal year, is well on its way to breeze past $100 billion this fiscal year, which ends on June 30. In the first two quarters, Microsoft already reported about $72 billion in AI investment costs.<\/p>\n
Amazon projects roughly $200 billion in capital expenditure costs this calendar year, a figure much higher than what Wall Street estimated going into the year.<\/p>\n
Microsoft\u2019s financial results on Wednesday come from the third quarter of its 2026 fiscal year, which should give a better indication for how much it\u2019s tracking to spend on AI for the full year. Microsoft CFO Amy Hood said in January, during the company\u2019s previous earning call with analysts, that capital expenditure costs should slowly decrease over the coming quarters. However, those costs will still be much higher than in past quarters.<\/p>\n
Ultimately, analysts are looking for signs that the red-hot spending will cool and tech companies will see an increased return on AI investment.<\/p>\n
Wall Street expects Microsoft to have a strong quarter in both revenue and profit, with the average revenue estimate at $81.4 billion. That would represent more than 16% year-over-year growth.<\/p>\n
Microsoft has regularly beat Wall Street estimates over the past few years and has been rewarded for it. But as analysts look past the billions in profit each quarter and eye rising costs, the company\u2019s stock price has suffered lately.<\/p>\n
During its most recent earnings call, Microsoft was pressed on the falling stock price, despite another strong quarter. Earnings grew 24% year-over-year for the last three months of 2025, but Microsoft\u2019s share price fell by 10% afterward.<\/p>\n
\u201cI think one of the core issues that is weighing on investors is (capital expenditures) is growing faster than we expected, and maybe Azure is growing a little bit slower than we expected,\u201d said Keith Weiss, an analyst with Morgan Stanley, on the January earnings call. \u201cAnd I think that fundamentally comes down to a concern on the (return on investment) on this capex spend over time.\u201d<\/p>\n
Hood defended both Microsoft\u2019s spending and the revenue for the Azure cloud computing platform, saying that AI investments will show up across different platforms, including its own products like Copilot.<\/p>\n
But as Microsoft reports earnings the same day as Amazon this week, investors will be able to instantly compare cloud revenue growth between the companies and their competitor, Google. Since Microsoft now directly breaks out Azure revenue, that comparison could win or lose them some favor on Wall Street. <\/p>\n