Alphabet and Microsoft both reported their highest ever quarterly capex spending for the three months ending September 30, and neither is hitting the brakes.
The two tech giants held their earnings calls on Wednesday, October 28, and the ramp-up of data center spending was a common thread for both firms.
Alphabet, Google's parent, spent $51.4 billion in the third quarter and maintained its 2026 outlook of $195 billion to $205 billion of capex expenditures. CFO Anat Ashkenazi said capex "will increase significantly" in 2027, with details to come later.
Microsoft runs on a different calendar and its fiscal year ends June 30, which means the September quarter was the first quarter of its fiscal 2027. The company spent $45.2 billion in this quarter, and CFO Amy Hood said the company’s 2026 calendar-year spending is estimated to be about $170 billion. She also expects the spending will accelerate in the coming months. Microsoft also added 24 new data centers across five continents during the quarter.
Here at RBN, we're watching tech firms closely because a portion of the billions of dollars they're investing ultimately flows to the energy sector with costs going to natural gas, coal, generators and the equipment to operate data centers.
When discussing costs, Alphabet's Ashkenazi addressed energy directly: "In terms of expenses, the significant increase in our investment in technical infrastructure will continue to weigh on the P&L in the form of higher depreciation expenses and related data centers operation costs, such as energy."
