The AI capex ledger: hyperscaler spending versus cloud revenue, 2024 to 2026

The ledger at the latest quarter

Calendar Q2 2026 (Microsoft’s fiscal Q4 2026) was the largest quarter of infrastructure spending on record for each of the four hyperscalers studied here. Amazon led on a cash basis with $54.2B of property and equipment purchases, followed by Alphabet at $44.9B, Microsoft at $35.8B and Meta at $30.1B. Year-over-year growth ranged from 68% at Amazon to 110% at Microsoft, where cash capex more than doubled from $17.1B.

The more telling figure is what share of internally generated cash the spending absorbed. Two years ago, in Q2 2024, the four spent 49% of their combined operating cash flow on capex. In Q2 2026 the ratio reached 96%. Microsoft remains the least stretched at 65%, helped by $55.4B of operating cash flow. Meta’s ratio jumped to 95% from 59% one quarter earlier, and its own reported free cash flow, which deducts finance lease principal, fell to $784M.

Cash capex is purchases of property and equipment from each cash flow statement. Microsoft’s own headline figure, which includes assets acquired under finance leases, was $41B for the quarter, including $5.6B of finance leases. Meta reported $31.08B including principal payments on finance leases.

Ten quarters of acceleration

The combined quarterly run rate has risen in every quarter but one since Q1 2024, and growth has itself accelerated. Combined capex grew 62% to 67% year over year through 2025, then 80% in Q1 2026 and 87% in Q2 2026. First half 2026 spending was $294.8B, nearly double the $160.1B of the first half of 2025. Alphabet’s H1 2026 capex of $80.6B was 103% above the prior year, Microsoft’s $66.7B was 97% higher, Amazon’s $98.4B was 72% higher and Meta’s $49.1B was 67% higher.

Over the full ten quarters, Amazon reinvested 96% of its operating cash flow, Alphabet 60%, Meta 58% and Microsoft 53%. Amazon has posted negative quarterly free cash flow three times in the last six quarters, and its trailing twelve month free cash flow was negative $7.6B at June 30, 2026, down from $18.2B a year earlier.

2026 guidance: roughly double 2025

Every company raised or held a higher full-year figure on its July 2026 call. Alphabet lifted its range to $195B to $205B from $180B to $190B, having started the year at $175B to $185B. Amazon raised cash capex guidance to about $220B from about $200B, attributing the increase to higher memory costs rather than additional capacity. Meta narrowed its range to $130B to $145B from $125B to $145B. Microsoft guided to approximately $175B for calendar 2026, down from about $190B, but said the change reflects a reclassification of future data center leases from finance to operating leases after extending useful lives to 25 years, and that underlying investment plans were unchanged. Microsoft also guided to more than $50B of capex in its September quarter.

On a like-for-like cash basis, the midpoints imply 119% growth at Alphabet versus its $91.4B of 2025 purchases, 67% at Amazon versus $131.8B, and 97% at Meta versus $69.7B. Microsoft’s guidance includes finance leases, so it is not directly comparable with its $83.1B of 2025 cash capex. To hit the midpoints, the four would need to spend roughly $440B in the second half of 2026, against $294.8B in the first half.

Oracle, reported separately because its fiscal year ends in May, spent $28.5B in the quarter ended August 31, 2026, more than its $23.1B of operating cash flow. In June 2026 it forecast fiscal 2027 capex of up to about $95B, of which about $70B would be its own spending, according to press reports of the call.

Financing the gap

As capex converges on operating cash flow, external funding has become part of the ledger. Microsoft is the exception: its cash flow statements show no net debt issuance across the period, only repayments. The others have tapped the bond market at increasing scale.

• Alphabet: long-term debt issuance of $26.8B in Q2 2025, $26.6B in Q4 2025, $31.4B in Q1 2026 and $24.8B in Q2 2026. Its Q2 2026 10-Q reports $56.2B of net debt proceeds in the first half of 2026, versus $31.4B a year earlier, plus $19.1B of mandatory convertible preferred stock.
• Amazon: after issuing almost no long-term debt in 2024 and 2025, it issued $53.4B in Q1 2026 and $13.6B in Q2 2026.
• Meta: issued $9.5B in Q3 2024, $29.2B in Q4 2025 and $23.9B in Q2 2026, ending June 2026 with $83.7B of long-term debt against $90.3B of cash and marketable securities.
• Oracle: completed a $20B at-the-market common stock sale in its August 2026 quarter and has described plans to raise about $40B through debt and equity in fiscal 2027.

Balance sheets remain strong in absolute terms, but the shift is structural: a spending program once funded entirely from operations now relies on capital markets for the marginal dollar at three of the four largest spenders.

Cloud revenue versus capex

Cloud growth has accelerated in step with spending. Google Cloud revenue grew 82% to $24.8B in Q2 2026, from 28% growth in Q1 2025, and its operating income rose to $8.8B from $2.8B. AWS grew 37% to $42.2B, its fastest rate in 18 quarters per management, with $16.6B of operating income. Azure and other cloud services grew 43%, up from 29% in Q2 2024, and Microsoft guided to about 45% in constant currency for the September quarter.

The gap remains wide. Over the ten quarters, Alphabet’s cumulative capex of $224.6B was 1.5 times cumulative Google Cloud revenue of $146.7B, and in Q2 2026 alone capex was 1.8 times cloud revenue. Amazon’s cumulative capex of $313.2B roughly matched cumulative AWS revenue of $316.1B, though Amazon’s spending also funds its retail network. Measured incrementally, Google Cloud’s annualized revenue rose by about $58B between Q2 2024 and Q2 2026, while Alphabet spent $199.4B on capex over the eight quarters in between; AWS added about $64B of annualized revenue against $280.7B of Amazon capex. Meta has no cloud segment, so its $156.1B of cumulative capex is recovered through advertising.

The counterweight is contracted demand. Microsoft reported commercial remaining performance obligation of $678B, up 84%, AWS a backlog of $496B and Oracle RPO of $664B. Management at Amazon and Microsoft said demand still exceeds available capacity. Those backlogs, rather than current revenue, are what the 2026 guidance is underwritten against.

Methodology

Period: calendar Q1 2024 (quarter ended March 31, 2024) to calendar Q2 2026 (quarter ended June 30, 2026), the latest quarter reported by all four companies (results released July 22 to July 30, 2026). Microsoft’s fiscal quarters were mapped to calendar quarters (fiscal Q3 2024 = calendar Q1 2024, fiscal Q4 2026 = calendar Q2 2026). Oracle is shown only for its latest fiscal quarter (ended August 31, 2026) and is excluded from all totals.

Definitions: capex is cash purchases of property and equipment (Microsoft: additions to property and equipment) as presented in each company’s cash flow statement, compiled via stockanalysis.com and cross-checked against earnings releases for the latest quarter. It excludes assets acquired under finance leases, so it understates Microsoft’s and Meta’s headline capex figures. Amazon’s line is purchases of property and equipment; management cited $53.1B of cash capex for Q2 2026 on its call. Free cash flow is operating cash flow minus capex on this basis and may differ from company definitions. Cloud revenue is Google Cloud segment revenue, AWS segment net sales, and Microsoft Cloud revenue as reported in each release; Microsoft does not disclose Azure revenue quarterly, so Azure is shown as reported year-over-year growth. Microsoft Cloud is a broad metric that includes commercial productivity and other services and is not comparable with AWS or Google Cloud.

Computations: capex as a percentage of operating cash flow, year-over-year growth, cumulative sums, guidance midpoints and implied second-half spending were computed in Python from the sourced quarterly figures. Year-over-year growth is shown only where the prior-year quarter is in the dataset, except where the company reported the rate. Guidance midpoints use $200B for Alphabet and $137.5B for Meta; the combined range of $720B to $745B sums the low and high ends with point estimates for Amazon and Microsoft.

Limitations: guidance definitions differ (Microsoft includes finance leases, Amazon refers to cash capex, Meta includes finance lease principal). Microsoft’s segment and Microsoft Cloud definitions were revised during the period and figures are shown as originally reported. Oracle’s fiscal 2027 capex and financing plans come from press coverage of its June 2026 call rather than a filing. Capex at Amazon and Microsoft also funds non-AI assets, and no company discloses AI-only capex.

Sources

• Quarterly cash flow statements for Microsoft, Alphabet, Amazon, Meta and Oracle, stockanalysis.com (as of October 6, 2026)
• Microsoft FY26 Q4 earnings release and prior quarterly releases (as of July 29, 2026)
• Microsoft FY26 Q4 earnings call transcript (as of July 29, 2026)
• Alphabet Q2 2026 earnings release and prior quarterly releases (as of July 22, 2026)
• Alphabet Form 10-Q for the quarter ended June 30, 2026 (as of June 30, 2026)
• Amazon Q2 2026 earnings release (as of July 30, 2026)
• Amazon Q2 2026 earnings call transcript (as of July 30, 2026)
• Meta second quarter 2026 results (as of July 29, 2026)
• W.Media on Alphabet’s raised 2026 capex range (as of July 23, 2026)
• Verdict on Oracle fiscal Q1 2027 results (as of September 11, 2026)