Big Tech’s US$750 Billion AI Spending Faces Slower Growth and Search Monetisation Risks

Big Tech’s AI build-out is running into a business problem: the companies financing it are seeing slower growth in some of the established operations that generate the cash. In Alphabet’s search advertising, the tension is sharper still. New AI features may help the company keep users, yet they currently bring in less money from some queries.

In 2026, America’s largest technology companies are collectively backing about US$750 billion in artificial intelligence spending. Alphabet maintained a capital spending outlook of as much as US$205 billion for the year. Amazon reiterated a plan for roughly US$220 billion. Microsoft and Meta Platforms also kept their spending guidance in place, even as investors reacted poorly to parts of their latest results.

The commitments come as companies raise debt, sell equity, sign multibillion-dollar data centre deals and take on large future obligations to build AI infrastructure worldwide. The scale makes the performance of their existing businesses central to the investment case: the cash engines supporting the expansion are showing signs of slowing, while some new products may draw users away from higher-margin offerings.

Investor patience meets spending plans

Alphabet’s search and other advertising sales, which account for roughly half of its total revenue, grew at their slowest pace in five quarters. The company’s shares fell sharply on Thursday, erasing nearly US$500 billion in market value. Amazon stock was down 7 per cent in late trading.

Meta has lost 10 per cent since reporting results last week. It told investors it would increase its AI ambitions and cautioned that Muse, its new agentic AI app, demands substantial computing resources. The combination leaves investors weighing the expected commercial value of new products against the near-term cost of developing and running them.

“The market is ‘scratching its head – how does all this pay off?’” said Dan Morgan, senior portfolio manager at Synovus Trust, after Alphabet reported its results.

Microsoft offered a reminder that strong growth in one division may not settle concerns about spending elsewhere. Azure sales rose 48 per cent to US$33.2 billion in the quarter ending in September. Its shares initially climbed, then gave up those gains and closed Thursday down 0.2 per cent.

Amazon’s mixed signals

Amazon’s core commerce and advertising operations both grew more slowly in the latest quarter. The company said a shift in the timing of its annual Prime Day—from the third quarter in 2025 to the second quarter in 2026—accounted for part of the slowdown. Analysts had factored in the change, however, and the reported figures still fell short of expectations.

Advertising services grew 11 per cent, Amazon’s slowest rate since it began reporting the category separately in 2022. Online stores grew by just 2 per cent, a pace last seen more than three years earlier, when consumers returned to pre-pandemic spending patterns and online shopping cooled.

Those figures drew attention away from Amazon’s cloud computing growth and added to doubts about the company’s large AI commitments. For shareholders, the question is whether cloud expansion can support the spending while retail and advertising growth lose momentum. The company’s plans leave little room to assess its AI strategy separately from its established businesses and the costs they carry.

Google’s search trade-off

Cloud computing was a brighter spot for Alphabet. Sales at the division more than doubled from a year earlier, while operating income more than tripled. Chief executive Thomas Kurian joined the company’s results call for the first time, underscoring the division’s growing significance.

But investor attention stayed on Search, still Alphabet’s central business. To compete as chatbots such as ChatGPT gain popularity, Google has added AI features to its search engine, including a dedicated AI Mode tab. The product may help keep users within Google’s services; the immediate commercial trade-off is lower monetisation on queries made through AI Mode.

Chief business officer Philipp Schindler acknowledged the lower monetisation on Wednesday. He said Google was working to bring more ads to the feature and expressed optimism about its prospects. That effort will test whether an AI-assisted search experience can earn advertising revenue at a level that supports the economics of the existing product.

Alphabet has struggled to keep pace in AI model development with startups Anthropic and OpenAI, according to the article. Bloomberg Intelligence analyst Mandeep Singh said regaining ground could help the company deliver the returns investors expect. He pointed to the combination of Search and a cloud division with expanding margins as a possible source of renewed profitability.

New advertising formats often begin with lower margins and improve as they develop, said Gene Munster, managing partner of Deepwater Asset Management. That possibility offers context for AI Mode’s early monetisation, but it doesn’t settle the larger question: whether Alphabet can turn user interest into advertising income while preserving the value of Search.

What the transition asks of Big Tech

For Google, a further opportunity may lie in agents that can make purchases for users and earn a cut of transactions. Munster described the change as a shift from influencing consumers through “blue links or display advertising” to influencing the bot that acts for them.

That model could create a new commercial channel, but it also raises the bar for product execution and computing capacity. Meta’s Muse illustrates how demanding these tools can be to run. Across the sector, the challenge is to grow new AI services while funding their infrastructure and protecting the profit streams that pay for it.

The latest results show that cloud growth can be strong even as other operations weaken, and that a company can sustain its spending plans while its shares come under pressure. The next measure of progress will be whether AI features and services generate enough revenue and margin to offset their costs—and whether established businesses remain strong enough to finance the transition.