The upcoming financial results of Amazon and Microsoft will be among the most important tests yet of the return on the huge investments in artificial intelligence. After years of accelerated construction of data centers, purchase of specialized chips and expansion of cloud infrastructure, investor attention is increasingly shifting from the size of investments to the actual revenues and profits they generate.
It is the reports of the two tech giants that will be key to assessing whether the capital directed at AI is starting to bring sufficient returns, George Maris, chief investment officer and global head of „Equities“ at Principal Asset Management, told CNBC.
The focus on Amazon and Microsoft is not accidental. The two companies operate two of the world's largest cloud platforms - Amazon Web Services (AWS) and Microsoft Azure - and are among the main beneficiaries of the demand for computing power to train and use AI models.
Until now, investors have largely accepted record capital expenditures as the necessary price to enter the technology race. But as investment increases, tolerance for spending without a visible return is decreasing.
The main question now is not whether the demand for AI exists, but whether its revenues are growing fast enough to justify the hundreds of billions of dollars that technology companies are investing in infrastructure.
Amazon gave a strong signal in its previous report. AWS revenue grew 37% in the second quarter to $42.2 billion - the strongest growth rate for the cloud division in more than four years.
The company simultaneously increased its 2026 capital expenditure forecast by 10% to about $220 billion.
Amazon CEO Andy Jassy explained at the time that even that would not be enough to meet all demand.
His latest comments show how strong the pressure on infrastructure remains. Jassi said AWS's cloud capacity is largely sold out by the end of 2027, with significant customer commitments already extending into 2028.
Microsoft also showed strong growthMicrosoft also made arguments to support the thesis that AI investments are starting to materialize in revenue.
In the latest report, Azure revenue grew by 43%, beating analysts' expectations for an increase of about 40%.
The company also gave a stronger-than-expected forecast for sales and growth in its cloud business, which temporarily eased market concerns about the scale of capital spending.
However, the next report should show whether this trend can be reserved.
Over 730 billion USD investments per yearThe scale of the technological race is already unprecedented.
According to estimates cited by Reuters, the total capital expenditures of large technology companies in 2026 are expected to exceed 730 billion USD.
These funds are mainly directed towards data centers, AI accelerators, servers, energy infrastructure and cloud capacity.
But the ever-increasing investments are starting to put pressure on free cash flow. A Reuters analysis of LSEG consensus estimates shows that, on current trends, Microsoft, Alphabet, Amazon, Meta and Oracle could collectively spend more on capital expenditure than they generate in free cash flow by 2027.
This changes the way investors value the AI boom.
Market punishes investments without quick returnsThe difference is already visible in stock market reactions. Amazon and Microsoft were rewarded after their previous results because they showed both high investment and strong cloud revenue growth.
Other technology companies were punished by investors when they increased their capital expenditure forecasts without showing equally convincing immediate returns.
Thus, the AI race enters a new phase. The mere announcement of investments in the tens of billions of dollars is no longer enough to impress the market. Investors are looking for evidence of growing revenues, higher margins and sustainable free cash flow.
Amazon and Microsoft's results this week will show whether the two largest cloud players continue to translate the huge demand for AI computing power into real financial results.
The answer will matter more than just the stocks of the two companies. It could affect valuations of the entire AI sector as markets increasingly weigh whether the biggest tech investment cycle in decades will deliver a return commensurate with the investment.