Wall Street Is Beginning to Panic About Big Tech Capex
Over the past few years, a periodic topic that we have talked about in these essays has revolved around Wall Street’s evolving attitude to AI mania. On again, off again jitters found with AI-related capital expenditures (capex) in 2023 and 2024 led to an attempt to separate perceived AI winners from losers in the back half of 2025. While this winners versus losers mentality still stands as certain tech stocks continue to outperform, there is evidence of Wall Street once again becoming nervous about AI’s impact on Big Tech capex. The stakes are much higher this time around with feelings of panic beginning to circulate in the air.
Despite reporting all-around good results for the fourth quarter, Wall Street just didn’t have much appetite for “Mag 7” (Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla) shares. Management commentary pointing to continued huge jumps in AI capex for 2026 offset what were genuinely strong revenue trends for many companies. The Mag 7 is looking to spend nearly $700 billion on capex in 2026, up from $400 billion in 2025. We can assume the vast majority of that increase is driven by AI-related investments. This year-over-year capex growth came in notably higher than expectations.
While Wall Street has shown prior bouts of hesitation when it comes to AI capex, this time is different. The magnitude of the AI spending
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Big Tech Should Be Spending Big on AI
It is OK that Big Tech is pouring huge amounts of cash into AI-focused capex.
As I am one of the more outspoken critics of generative AI mania, the following statement may come as a surprise: It is OK that Big Tech is pouring huge amounts of cash into AI-focused capex. I would go so far as to say that Big Tech is doing the right thing. While Wall Street and Silicon Valley are still grappling with how generative AI will be used by the masses, the big picture regarding how AI will eventually come to define all computing is flying under the radar. Big Tech capex exploding higher is a necessity, and free cash flow projections need to be reexamined as a result.
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Receive Exclusive Essays. The cornerstone of an Inside Orchard subscription is access to Neil’s weekly essays on the latest developments in the technology industry. Weekly essays are ~1,000 words and sent via email. Essays revolve around the following topics: technology industry analysis, business model analysis, technology’s impact on societal and consumer trends. Create a free profile to read a few sample essays.
Access Exclusive Private Podcast. Listen to Inside Orchard essays via an exclusive private podcast. After becoming a member, all previously-published podcast episodes become available in your favorite podcast player. Podcast episodes never become available to the public.
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