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Every time I think about this, it stops me cold.
The Interstate Highway System took 35 years to build. It extends 48,000 miles, from Maine to California, with every slope and bridge in between.
This asphalt is enough to circle the globe approximately twice.
Total cost in today’s dollars? About 630 billion dollars.
Now think about this… Big Tech companies are spending $725 billion on building AI.
And that’s just this year.
That’s a huge amount of money, and it’s hard to even wrap our brains around it.
To pack that much money into $100 bills, you’d need 7,250 pallets. When put end to end, that’s a money line that runs from New York to Los Angeles and back — three times.
Now, Wall Street wants to know what they’ll get for all that spending.
That’s why all eyes have been glued to the big tech companies’ reports this earnings season – especially Magnificent Seven shares.
So, on the day Market 360We will review three of them: Alphabet company (Google), Amazon.com, Inc. (Amzn) and Microsoft Corporation (MSFT). We’ll also see if their spending on AI actually pays off.
Next, I’ll show you what this means for the next phase of the AI boom, and where the next investment opportunities arise.
The alphabet is pumping – and continuing to spend
Alphabet reported earnings of $5.11 per share on revenue of $109.9 billion, beating expectations on both counts.
The most notable unit was Google Cloud, which posted revenue of $20.03 billion — an increase of 63% from a year ago, and well above analysts’ expectations of $18.4 billion. This is a clear sign that Alphabet’s investments in AI are translating into real growth.
Investors noted that shares rose about 10% yesterday.
However, this growth will not come cheap. Alphabet raised its spending forecast for the full year to between $180 billion and $190 billion. She also said spending would rise “significantly” again through 2027.
Amazon outperforms its competitors, but gets punished…
Next, we have Amazon. The company reported earnings of $2.78 per share on revenue of $181.5 billion in the first quarter, easily beating expectations of $1.62 per share on revenue of $177.2 billion.
In other words, a massive win.
AWS, its cloud business, generated $37.6 billion in revenue — up 28% year over year and its fastest growth rate in 15 quarters.
That should have been enough, but it wasn’t. Investors were looking for AWS growth closer to 30%.
But Amazon has made clear it will not hold back on spending, forecasting nearly $200 billion in capital spending in 2026 alone — the same as previous projections.
Despite the stellar results, Amazon shares rose just 1% on Thursday.
Microsoft: Stunning AI numbers and terrible reaction
Finally, we turn to Microsoft. It may have provided the clearest evidence yet that AI generates real revenue – even if it comes with a hoax.
For the third quarter, the company reported earnings of $4.27 per share on revenue of $82.89 billion, beating expectations of $4.04 and $81.46 billion.
Azure Cloud grew 40% year over year, beating analysts’ expectations of 38%. Its artificial intelligence sector generated $37 billion, up 123% year-over-year.
Therefore, Microsoft is turning everything it spends on AI into meaningful revenue. But the company is still spending big to keep up.
But Microsoft told investors to expect $40 billion in capital expenditures in the next quarter alone, and $190 billion for all of 2026 — a sharp rise from the previous estimate of $150 billion. Revenue guidance for the next quarter came in slightly below the Wall Street consensus.
That combination of weaker guidance and higher capex was enough to push Microsoft shares down 4% on Thursday.
Should you buy these stocks?
So, what did we learn from this week’s earnings?
The demand for AI is real, and these companies are seeing strong growth from it, thanks to their booming cloud revenues. But investors are clearly becoming skittish about the results.
They’re also concerned about all this spending on AI — and understandably so.
Big tech companies have already spent about $1 trillion on AI infrastructure. Combine the $725 billion from this year alone, on top of the expected future spending of $3 trillion…that’s staggering.
We’re talking about the largest crowdfunding investment in history.
So, is all this spending worth it? Only time will tell. But more importantly, the question is… should you buy these stocks today?
If not, which stocks are more worth your money?
To answer this, I ran all three through my Stock Grader system (Subscription required). As you can see in the table below, the results are mixed…
In the case of Amazon and Microsoft, strong revenues don’t automatically create strong stock. Right now, my system indicates real headwinds for both – and this earnings season helps explain why.
Alphabet received an overall grade of B, making it a “strong” stock. If you own it, I’m not telling you to sell. But honestly, I think there’s more money to be made elsewhere…
The AI boom isn’t slowing down – but the winners are changing
Let’s go back to the $725 billion number for a second. Think about it. Someone is supplying all that infrastructure.
Data centers. Servers. Cooling systems.
And these companies – the ones that enable prosperity – are the real winners now.
But there’s something else that wasn’t covered in any of these earnings calls.
There is a ceiling on what AI can do today. Cloud revenue could grow by 63%. AI sectors could rise by 123%. But the underlying technology that powers all of these systems suffers from a fundamental limitation that more spending alone will not address.
If we really want to unleash the full potential of AI and do things that really matter — curing diseases like cancer, building energy sources that never run out, or answering some profound questions about the universe — today’s AI will not get us there.
This is where a new class of artificial intelligence computing comes into play.
Currently, it is being built quietly behind the scenes to break through this ceiling.
This is what I break in my new one Reset AI surround.
In it, I’ll show you exactly which companies I believe are best positioned as this shift unfolds — including one that recently signed a deal with the Trump administration to build what could be The most powerful AI computing system ever assembled.
The AI cloud race is real. But the next race has already begun. And it doesn’t look like what I saw in this week’s earnings reports.
Click here now to watch my full summary of Reset AI now.
sincerely,
Louis Navellier
editor, Market 360
