Markets AMZN AUG 02, 2026

AI capex reckoning splits Big Tech: AWS +37%, Meta FCF −91%, ~$725B on the table

Microsoft and Amazon rallied on demand-anchored capex; Meta and Apple sold off as free cash flow buckled under the AI buildout.

BY HENLEY MARRAST · MARKETS DESK

Microsoft rallied roughly 8% on Thursday, its best session since 2008, and Amazon jumped about 10%, as investors sorted the hyperscaler cohort into two increasingly distinct piles: those whose AI capital spending is anchored to visible demand, and those whose isn’t. With roughly $725 billion in combined capex now on the table across the group, that sorting is no longer academic.

Amazon’s Q2 print did most of the work. Net sales hit $200.6 billion, up 20%, with operating income of $27.5 billion, up 43%. AWS grew 37% to $42.2 billion, its fastest pace in 18 quarters, on a $169 billion annualized run rate. CEO Andy Jassy said the segment’s “AI and Chips businesses each eclipsed run rates of more than $25 billion.” Net income of $62.6 billion included $53.4 billion in non-operating pre-tax gains tied to Amazon’s Anthropic stake. Guidance for Q3 came in at $197–$202 billion, with 2026 capex raised to roughly $220 billion.

Microsoft’s fiscal Q4 landed in the same register. Revenue of $90.0 billion, up 18%; operating income of $40.6 billion; GAAP diluted EPS of $4.81, up 32%. Azure grew 43%, annual Azure revenue crossed $100 billion for the first time, and Microsoft 365 Copilot reached 30 million paid seats. Satya Nadella framed the print as “confidence customers are placing in us to power their AI transformation.” FY2027 capex guidance of $255–$260 billion drew a shrug from bulls; Wells Fargo told clients “MSFT has room to meaningfully re-rate.”

The contrast is the story. Alphabet, reporting the prior week, saw free cash flow turn negative for the first time since its 2004 IPO, with long-term debt up 111% to $98 billion in H1. Meta’s capex trajectory is tracking $138.9 billion, and its free cash flow collapsed 91%. Apple sold off after Tim Cook warned that memory “supply constraints” would persist and could’ve “an increasing impact on our business,” echoing Jassy’s own reference to the “inflated price of memory chips.”

Evercore ISI’s Mark Mahaney summarized what separated the winners: “Not only is the revenue growth dramatic, but the profitability is rising.” That’s the line the market is now drawing, and it maps almost exactly onto which companies can show a paying enterprise customer behind each new GPU.

Sources

About the author

Henley Marrast

MARKETS DESK

Henley Marrast covers AI-equity flow, accelerator demand, and earnings prints for AI Sheet Report. She leads coverage of the public AI complex from the New York markets desk, with a focus on the daily tape and quarterly results. She has been writing about technology markets for several years.