Big Tech Ramps AI Cloud Spend Into 2026

December 26, 2025 at 19:20 UTC

6 min read

AI cloud investment growth chart with tech infrastructure, highlighting Big Tech spending trends

Key Points

Amazon, Microsoft, Alphabet and Oracle are sharply increasing AI data center capex for 2025–2026.
Oracle’s massive AI cloud backlog is paired with rising debt, negative free cash flow and funding questions.
Microsoft and Amazon report accelerating cloud and AI revenue growth despite investor capex concerns.
Apple advances “Apple Intelligence” and new iPhones while facing regulatory pressure and mixed AI perceptions.

AI Supercycle Drives Record Cloud Investment

Across late 2025, the largest U.S. technology companies are committing unprecedented capital to artificial intelligence infrastructure as AI moves from experimentation to broad deployment. Amazon, Microsoft and Alphabet are all raising 2025 capital expenditure plans to fund new data centers and custom chips, while Oracle is rapidly expanding AI‑optimized facilities to serve hyperscale customers such as OpenAI, Meta and NVIDIA. Survey work cited by Ramsey Theory Group points to enterprises prioritizing agentic AI systems, cost control and governance, reinforcing demand for scalable cloud platforms. At the same time, equity markets have become more selective: investors are increasingly focused on whether heavy AI spending can translate into durable revenue and cash flow, and some high‑profile stocks have experienced volatility when funding or execution risks emerge.

Amazon Leans on AWS and Anthropic to Power AI Growth

Amazon’s 2025 results highlight how AI is reshaping both its retail and cloud operations. In the third quarter, Amazon Web Services generated $33.01 billion in revenue, up 20.2% year over year, with CEO Andy Jassy citing AI and core infrastructure as key growth drivers and noting more than 3.8 gigawatts of added capacity over 12 months. The company has invested $8 billion in AI startup Anthropic, which agreed to use 1 million custom Trainium2 chips by the end of 2025. Trainium2 revenue jumped 150% sequentially, and Amazon unveiled “Project Rainier,” an $11 billion AI data center built around 500,000 Trainium2 chips running Anthropic’s Claude chatbot. On the application side, Amazon has rolled out consumer and enterprise AI tools including Rufus, a shopping assistant used by more than 250 million individuals, the Q business chatbot and the Bedrock generative AI service. Management lifted 2025 capex guidance to $125 billion and signaled further increases, while forecasting fourth‑quarter 2025 sales of $206–213 billion and double‑digit revenue and earnings growth for next year.

Microsoft Deepens OpenAI Ties as Azure Surges

Microsoft’s latest figures show AI demand feeding directly into cloud growth. In the first quarter of fiscal 2026, the company reported $77.7 billion in revenue, up 18% year over year, with Intelligent Cloud revenue of $30.9 billion rising 28.3%. Azure and other cloud services grew about 40%, with management attributing nearly 20 percentage points of Azure’s 2025 growth to AI services. Microsoft Cloud revenue surpassed $49 billion, up 26%, and commercial remaining performance obligations reached nearly $400 billion, more than 50% higher year over year. To support this, Microsoft spent $34.9 billion on capex in the quarter and expects fiscal 2026 capex growth to exceed fiscal 2025. The company has embedded Copilot AI across Microsoft 365 and Dynamics, launched Microsoft 365 Copilot Business at $21 per user per month, and plans Microsoft 365 price increases from July 2026. A new definitive agreement with OpenAI secures exclusive Azure rights until at least the achievement of AGI through 2030 and adds an incremental $250 billion of contracted Azure services. Despite short‑term share underperformance tied to concerns about OpenAI’s work with Oracle, consensus estimates still point to mid‑teens revenue and earnings growth for fiscal 2026.

Oracle’s AI Cloud Backlog Grows Amid Funding Strains

Oracle has become one of 2025’s most closely watched AI infrastructure stories, combining rapid cloud growth with rising financial strain. In the second quarter of fiscal 2026, Oracle’s total revenue rose 14% to $16.1 billion, while cloud infrastructure revenue jumped 68% to $4.1 billion and total cloud revenue reached $8 billion, up 34%. Remaining performance obligations surged 438% year over year to $523 billion, driven by large multi‑year contracts with Meta, NVIDIA and OpenAI, and management expects faster conversion to add about $4 billion of revenue in fiscal 2027. The company is expanding a multicloud strategy, with more than 211 live and planned regions and dozens of Oracle Multicloud data centers embedded within Amazon, Google and Microsoft clouds. Regulators in Michigan approved a 1‑gigawatt data center tied to OpenAI, and Oracle secured a controlling interest in TikTok’s U.S. operations via joint venture. However, Oracle now projects about $50 billion in fiscal 2026 capex, up from a prior $35 billion estimate and far above the previous year’s $21.2 billion. Free cash flow turned negative by roughly $10 billion in the November quarter as spending accelerated. Funding concerns intensified after reports that Blue Owl Capital withdrew from backing the $10 billion Michigan project, prompting Oracle to explore alternative structures such as customer‑funded equipment and chip leasing. While some investors and funds cite strong AI‑driven demand and OpenAI partnerships as reasons to initiate positions, others focus on execution risk, customer concentration and the sustainability of Oracle’s elevated capex and debt load.

Apple Balances AI Push With Regulatory and Market Scrutiny

Apple enters 2026 as a $4 trillion company navigating both the AI supercycle and intensifying regulation. In fiscal 2025, Apple generated $416.16 billion in revenue, up 6.4%, and net income of $112.01 billion, up 19.5%, with gross margins approaching 47%. The September quarter delivered $102.5 billion in revenue, an 8% increase, helped by a new higher‑priced iPhone lineup that funds say is seeing strong early demand. Apple has rolled out “Apple Intelligence” features and is testing a subscription‑based “Intelligence Pro” tier, while planning a major Siri update in 2026. Analysts and funds note that Apple has spent less on AI than some peers and has been perceived as underinvesting, even as it reallocates staff and increases AI capex. At the same time, Apple faces regulatory changes, including allowing third‑party app stores in Brazil and complying with Europe’s Digital Markets Act, which could pressure App Store economics. Legal actions, such as a U.S. antitrust case and fines in Europe, underscore ongoing scrutiny. Despite these headwinds, Apple’s balance sheet, services growth above $100 billion annually and continued analyst “buy” ratings support its role as a core holding, though some investors argue that other AI‑focused stocks may offer higher prospective returns.

Key Takeaways

AI infrastructure has become the central investment theme for the largest cloud providers, with capex plans in the tens of billions of dollars per year.
Amazon and Microsoft are already translating AI spending into faster cloud growth and large contracted backlogs, reinforcing their scale advantages.
Oracle’s strategy hinges on converting an unusually large AI cloud backlog into profitable revenue while managing higher leverage and project funding risks.
Apple is integrating AI more gradually, pairing strong device and services performance with heightened regulatory exposure and debate over its AI pace.
Investor focus is shifting from AI hype to measurable returns on capital, making execution, funding structure and regulatory resilience key differentiators for 2026.