Mike Larson | Editor-in-Chief
Have hyperscalers lost the plot? After racking up phenomenal gains for a long time, soaring AI spending bills are coming back to bite them in 2026!
Check out the MoneyShow Chart of the Day here. It shows the three-month performance of leading AI stocks like Alphabet Inc. (GOOGL), Meta Platforms Inc. (META), Amazon.com Inc. (AMZN), Oracle Corp. (ORCL), and Microsoft Corp. (MSFT). You can see they’ve all lost ground since April, with Oracle down a sizable 31.6%.
GOOGL, META, AMZN, ORCL, MSFT (3-Mo. % Change)
Data by YCharts
Staggering capex costs are the culprit here. UBS recently estimated the major hyperscalers would shell out $673 billion in 2026, up 76% year-over-year. That number could rise another 25% in 2027.
But those figures could prove too low. Alphabet just raised its 2026 capex estimate by $15 billion to as much as $205 billion when it reported second-quarter results. FactSet just released a report saying the total could hit $800 billion, a figure so high the companies won’t be able to cover it with cash flow. That’s forcing them to raise money by selling equity or debt – and weighing on hyperscaler stocks.
Investors have long been willing to give tech companies the benefit of the doubt. They’ve bought into the idea that massive spending now will deliver powerful sales and earnings growth later. That, in turn, has allowed companies to continue to raise capital.
But IF the shorter-term pullback turns into a longer-term selloff, things could get dicey. Not just for AI and tech stocks, but the markets overall. Stay tuned!
In this special MoneyShow MoneyMasters Podcast episode recorded at the Las Vegas Symposium, I sit down with Eva Ados, COO and chief investment strategist at ERShares, and Mark Mahaney, director of internet research at Evercore ISI.
Eva shares her long-term thesis for SpaceX (SPCX), describing it as a three-engine business built around launch operations, Starlink, and the potential development of AI infrastructure in space. She explains why ERShares views SpaceX as a category leader with limited meaningful competition and substantial long-term runway.
Plus, Mark reveals why Amazon.com Inc. (AMZN) is one of his highest-conviction ideas. He explains how a recovery in Amazon Web Services growth could provide evidence that the company’s heavy artificial intelligence investments are beginning to produce a return—potentially leading to higher earnings expectations and a major re-rating of the stock.
Stonks sold off hard recently as – you know – AI spending fears roiled the chip makers. We’ve seen this more times than we can count and talked about it more still. Run for the hills if you want – but know that the markets are the only store on earth where customers fear a sale, writes Keith Fitz-Gerald, editor of 5 With Fitz.
With $100 billion in assets, the Schwab US Dividend Equity ETF (SCHD) is widely recommended by financial advisors as a conservative, dividend-focused ETF. Now, a newly launched ETF aims to mirror the SCHD portfolio while doubling the yield through option trading – the YieldMax US Stocks Target Double Distribution ETF (DDDD), notes Tim Plaehn, editor of The Dividend Hunter.
