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Big tech invests - the market adjusts
15/05/2026
Substantial upward revisions in capex reflect the AI infrastructure boom – early signs of increasing monetization are becoming visible
The outlook for the U.S. technology sector remains broadly positive, with some areas showing particularly strong momentum. As our ‘Chart of the Week’ illustrates, analysts have significantly revised upward their estimates for capital expenditure (capex) of the ‘Big 5’ Hyperscalers - Alphabet (Google), Amazon, Microsoft, Meta and Oracle - over the past twelve months.[1] The magnitude of these revisions has been more pronounced than those for revenue or earnings expectations. This is particularly evident when looking further ahead: while adjustments for 2026 are already notable, those for 2027 are even more significant. Overall, this suggests that markets increasingly view the current investment momentum as extending over a longer period.
Looking back helps to put recent developments into context. Like the summer and autumn of 2025, markets are currently reacting strongly to new and, in some cases, unexpected developments, most notably the renewed increase in investment plans announced by major technology companies. The repeated upward revisions indicate that actual spending plans have often exceeded initial expectations. At present, investments are expected to rise by around 70% in 2026. As Tobias Rommel, Portfolio Manager Global Equities, highlights, spending on AI infrastructure is approaching USD 800 billion this year.
A key driver behind this development is the ongoing expansion of AI infrastructure. A large share of investments appears to be directed toward computing power - including servers, graphics processing units (GPUs) and storage - while the remainder is allocated to buildings, energy supply and cooling. At the same time, elevated order backlogs among cloud providers point to structurally robust demand. Against this backdrop, companies may face continued pressure to increase their investment levels to remain competitive.
This investment dynamic is beginning to be reflected in earnings developments for those companies that provide parts of the AI infrastructure. In particular, the semiconductor and memory segments are showing strong growth. Rommel notes: “We expect around 60% earnings growth for technology stocks this year.” At the same time, valuations across many AI-related segments have normalized compared with earlier peaks. As a result, the focus is gradually shifting from purely forward-looking expectations toward realized earnings power.
Additionally, a greater degree of dispersion is emerging. Companies that are more directly exposed to AI-related investment trends are generally outperforming others. This may create additional opportunities over time, including for firms that succeed in integrating AI into their business models.
For investors, this suggests a differentiated picture. While the market clearly reflects strong confidence in the sector’s long-term potential, the key question remains the pace at which investments translate into earnings. Early signs of monetization are beginning to emerge, supported by rising AI-related revenues and a sharp increase in cloud order backlogs, which point to a strengthening link between investment and commercialization.
Change of consensus estimates for the ‘Big 5’ hyperscalers over the last 12 months
Sources: Bloomberg Finance L.P., DWS Investment GmbH as of 5/11/26
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