Why tech stock bulls may not shake this AI problem

Roughly 71% of fund managers do not expect any AI hyperscaler to announce a cut in capital expenditures this year, according to BofA's latest fund manager survey, up from 61% in July. BofA analyst Vivek Arya estimates 2026 hyperscaler capex could approach $860 billion, up 80% year over year, with a path to about $1.2 trillion by 2027. Amazon leads with a target of roughly $220 billion for 2026, Alphabet raised guidance to $195-$205 billion, Microsoft is tracking toward $190 billion, and Meta raised its forecast to $130-$145 billion.

The tech stock bulls who plowed back into their favorite hyperscaler names, such as Alphabet GOOG https://finance.yahoo.com/quote/GOOG/ , GOOGL https://finance.yahoo.com/quote/GOOGL/ , Amazon AMZN https://finance.yahoo.com/quote/AMZN/ , and Microsoft MSFT https://finance.yahoo.com/quote/MSFT/ , after second quarter earnings would be wise to remember one thing. Aggressive AI spending — which has weighed on top tech stock names this year — is unlikely to be reined in by the execs doling out the checks. At least that's the vibe on Wall Street right now. Roughly 71% of fund managers do not expect any of the AI hyperscalers to announce a cut in capital expenditures this year, according to BofA's latest fund manager survey out on Tuesday. The figure is up from 61% in July. Only 21% of polled fund managers see a capex cut at a major hyperscaler. What's more, AI hyperscaler capex is believed to be the most likely source of a systemic credit event for the second straight month. Investor concern around how much tech is spending on AI is understandable. Not only are the numbers large, but they seem to be growing larger by the day, with no peak in sight. BofA analyst Vivek Arya estimated in a new note that 2026 hyperscaler capex could approach $860 billion this year, up 80% year over year. Arya "sees a path" toward about $1.2 trillion in capital expenditures by 2027, up about 38%. Individually, Amazon leads the spending pack with a target of roughly $220 billion for 2026, up 83% year on year, driven primarily by AWS data center expansion and high-performance server deployments. Alphabet raised its full-year guidance to between $195 billion and $205 billion, a 110% year-over-year surge from 2025 levels, after second quarter spending spiked to support Google Cloud and DeepMind infrastructure. It said it sees a "significant" increase in capital expenditures for 2027. Meanwhile, Microsoft is tracking toward approximately $190 billion in annual capex, up 65% year over year. Meta META https://finance.yahoo.com/quote/META/ raised its full-year capital expenditure forecast to a range of $130 billion to $145 billion, representing a 92% year-over-year jump as it heavily scales custom silicon and AI cluster capacity. Arya said, "Compute remains mostly supply constrained today, and we see increased hyperscale appetite to continue investing in capacity — backed by customer commitments and quickly accelerating AI sales." Brian Sozzi is Yahoo Finance's Executive Editor, host of the Power Players with Brian Sozzi podcast, and a member of Yahoo Finance's editorial leadership team. Follow Sozzi on X @BrianSozzi , Instagram , and LinkedIn . Tips on stories? Email brian.sozzi@yahoofinance.com. Click here for in-depth analysis of the latest stock market news and events moving stock prices Read the latest financial and business news from Yahoo Finance