BIG TECH STILL GROWING FAST BUT CAPEX PLANS A WORRY

01.05.2026 Big Tech results this week recorded annual revenue growth in the mid-teens. However, capex plans were again revised higher. Below we look at the outlook for the sector and markets more generally.

Big tech results this week (Microsoft, Alphabet and Amazon) recorded average annual revenue growth in the mid-teens. Encouragingly revenue growth from cloud services was significantly higher than that while the cashflow that the businesses are throwing off also increased materially.

However, capex plans were again increased. So much so that Big Tech now plan invest a collective USD 725 bn on expanding the Artificial Intelligence economy in 2026. The major issue surrounding the technology sector is whether it will be possible to earn an economic return from these vast investments. For example, a 20% return on a USD 200 bn investment implies that profits have to increase by the very large number of USD 40 bn.

As long as revenues and cashflows are increasing at rapid rates markets are likely to give Big Tech the benefit of the doubt. This is especially the case because outside of the Technology sector there is not much economic growth. It remains the case that portfolios should be cognizant of the risks surrounding these huge investments.  With this in mind portfolios should be diversified across geographies and investment styles.

For information only. Investors should seek professional advice for their own circumstances before making an investment.

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This post was written by Robin