Alphabet, Amazon, Microsoft, and Meta plan to spend more than $700 billion on capex this year. So why did Nvidia tank?Alphabet, Amazon, Microsoft, and Meta plan to spend more than $700 billion on capex this year. So why did Nvidia tank?

Big Tech’s big capital spending continues to surge even higher than the companies had previously expected.

Combined, AlphabetGOOG $382.40 (0.38%), AmazonAMZN $267.55 (1.24%), MicrosoftMSFT $413.24 (1.65%), and MetaMETA $608.80 (-0.52%) plan to spend more than $700 billion on capex in 2026, nearly double what they spent last year and $100 billion more than they’d predicted just last quarter, as they continue to build out the AI infrastructure to support their AI futures.

• The 2026 capex guidance for this group — which went up about $15 billion thanks to Meta and Google’s updates — has been a shorthand for Nvidia’sNVDA $198.12(-0.59%) earnings outlook throughout the AI boom. That makes sense, as it’s one of the biggest suppliers to all four firms.
• On the surface, it’s difficult to see why Nvidia got clobbered to the tune of 4.7% after the Magnificent 7’s four hyperscalers reported earnings after the close on Wednesday.**** What gives?
• As the AI boom evolves, one reason being offered for Nvidia’s sharp sell-off is that its most important product — GPUs — simply aren’t the key missing ingredient right now. Rather, they’re something these companies are trying to do without while building up their own suite of offerings.

After a spike during Q4 earnings, hyperscalers aren’t talking as much about the OG brains behind the AI boom, but they are talking a lot about the hardware they’re bringing to the table, and nodding to the idea that escalating capex numbers are indeed a function of higher memory chip prices, rather than a more aggressive accumulation of GPUs.

The Takeaway

Of course, this is 20/20 hindsight: Nvidia — like every chip company — has been on an absolute heater since the market bottomed in late March. And to be clear, the chip designer’s sharply rising sales estimates strongly imply that hyperscalers’ hardware offerings are meant to augment, rather than replace, demand for the most valuable company’s products.