The four HyperCAPEX musketeers collectively spent over $210 billion on CAPEX in Q3, up 22% from last quarter and up 84% from a year ago. New CAPEX record! And what we like to call a good start!
This quarter’s spend is 84% of their entire year 2024 spend, while their cumulative lifetime CAPEX spend is now over $2 trillion.
Collective year-to-date spending is over $515 billion. Full year guidance has fallen slightly to $720-740 billion. Meta bumped the low end of their spend up by $5 billion while Microsoft cut expected spend by $5 billion due to delayed “third party capacity deliveries”.
| CAPEX Guidance (Jan 26) | CAPEX Guidance (Jul 26) | CAPEX Guidance (Oct 26) | |
| Amazon | $200 billion | $220 billion | $220 billion |
| $175-185 billion | $195-205 billion | $195-205 billion | |
| Meta | $115-135 billion | $130-145 billion | $135-145 billion |
| Microsoft | $140+ billion (estimate) | $175 billion | $170 billion |
| TOTAL | $640+ billion | $720-745 billion | $720-740 billion |
We’re getting early qualitative guidance that nex tyear’s CAPEX spending will “accelerate”, “increase significantly” and be “meaningfully more”. Barring some serious “pacing” of the AI market, a trillion dollars in collective CAPEX spending in 2027 seems likely.
Aggregate trailing twelve month (TTM) free cash flow for our four HyperCAPEX stalwarts ($62.38B) is down 59% from last quarter ($150.55B) and 70% from a year ago ($209.1B). Quarterly free cash flow for Amazon, Google and Meta is negative. We’ll need an AI music video for the soon-to-be-hit song “I’ll Have Free Cash Flow When I’m Dead” (video caption: $2 trillion in CAPEX for this?).
Amazon
Amazon’s corporate level CAPEX spend was $78.73 billion (don’t forget your finance leases!), up 44% from last quarter and 118% from a year ago. New CAPEX record!
AWS CAPEX was $51.1 billion, up 18% from last quarter and 102% from a year ago. New CAPEX record. AWS spending was over 73% of Amazon’s overall CAPEX, a relative decline (versus a ten year trend of just 44%).
Amazon continues to put Stalin’s mantra of “quantity has a quality all its own” into action.
We still expect 2026 cash CapEx of approximately $220 billion, the majority for AWS, and expect to spend meaningfully more in 2027.
With our continued pace of innovation, new core and AI functionality, enterprises wanting to run their core and AI workloads in AWS, and the amount of capacity that we’re adding each year, we believe that AWS can grow north of 40% in each of 2027 and in 2028 and be a trillion-dollar revenue business in the next five to 10 years.
(Note: the trillion dollar revenue squirrel did not distract Wall Street from its disappointment with Amazon’s earnings).
On the CapEx involved to grow the way we’re talking about, it’s meaningful. I think that the way we think about it, Doug, is that this is a once in a lifetime opportunity.
Would it be more convenient if this type of acceleration and opportunity happened over 25 years and you could spread the CapEx over 25 years? Yeah, it might be more convenient, but that’s not the world that we live in, and that’s not the opportunity. We can fund this plan.
Andy Jassy wishes the neoclouds “good luck”:
We see a strong linkage between AI spend and growth in our revenue for core services. As customers invest in AI, we see a corresponding increase in core consumption, and we expect that relationship to strengthen as more AI workloads move into production and drive additional demand for compute, storage, and networking.
Superintelligence mentions: 0
Google spent $51.36 billion on CAPEX, up 14% from last quarter and 114% from a year ago. New CAPEX record!
Guidance for 2026 was unchanged at $195-205 billion. With $131.95 billion in year-to-date spend, that suggests a Q4 blowout of $63-73 billion.
CapEx was $51.4 billion in the third quarter with the vast majority of the spend in technical infrastructure to support our investments in AI. Approximately 65% of our investments in technical infrastructure in Q3 was related to servers and networking equipment, which generally have useful lives of six years. The remaining 35% was for data centers, which have useful lives of seven to 40 years.
…our full‑year 2026 CapEx guidance range of $195‑$205 billion remain unchanged. We continue to expect our CapEx to increase significantly in 2027.
We had negative free cash flow of $9.1 billion in the third quarter, driven by our investments in CapEx. Free cash flow in the third quarter was also affected by the aforementioned inventory bill to support TPU system sales and payment of the EC fine.
We have also entered into multiyear agreements to secure capacity for technical infrastructure and inventory, as well as leases and energy. At the end of the third quarter, we had future purchase commitments of $924 billion and pre-commencement leases and other obligations of $152 billion.
Superintelligence mentions: 0
Meta
Meta spent $34.9 billion in Q3, up 12% from last quarter and 80% from a year ago. New CAPEX record!
Guidance for 2026 full year CAPEX narrowed from $130-145 billion last quarter to $135-145 billion. Guidance at the beginning of the year was $115-135 billion. YTD spend is $85.83 billion, so Q4 should be a blowout.
In the near term, Muse is very compute-intensive to run. But we expect to improve its cost efficiency by more than 10x in the next year, which will enable it to be profitable once the revenue lines are at scale. If compute efficiency continues improving quickly for another few years, which we think is highly likely, then Muse will be highly profitable over multiple years.
Beyond its direct CAPEX expenditure, Meta also owns a 20% share of data center projects in Louisiana and Texas. Meta has committed to invest 20% of the $41 billion expected cost, then pay to lease those facilities beginning in 2029 and 2028. I don’t know whether the 20% will show up on their reported CAPEX number or as a balance sheet items (someone more knowledgeable please educate me!).
Free cash flow was negative $2.12 billion. And headcount was down 15% year-to-year!
Superintelligence mentions: 13
Microsoft
Microsoft spent $45.2 billion on CAPEX, up 10% from last quarter and 30% from a year ago. A new CAPEX record!
Microsoft was the only company to reduce guidance for Q4, dropping annual spend forecast from $175 billion to $170 billion. Disappointing, needless to say.
Capital expenditures were $45.2 billion, as some third-party capacity deliveries we expected in Q1 were delayed. Roughly three quarters of our capex was for short-lived assets, primarily CPUs and GPUs, including higher memory and storage costs, as we continue to invest in the infrastructure required for our customers to build and scale AI applications.
The remaining spend was for long-lived assets. This quarter, finance leases were $7.4 billion. And cash paid for P, P, and E was $39.4 billion.
In Q2, we expect CapEx spend will be over $50 billion. Therefore, for the calendar year, spend should be approximately $170 billion due to the 3P capacity delays noted earlier. In the second half of the fiscal year, we currently expect CapEx spend to accelerate primarily from CPUs, inclusive of higher memory and storage costs, and GPUs, as well as the 3P capacity deliveries that shifted to H2.
Given our strong business performance, we expect to continue to remain free cash flow positive in FY27. To complement cash generated by the business and preserve financial flexibility, we will access additional sources of funding when we believe it is attractive to do so.
Free cash flow was $18.6 billion (the only company still positive, at least for now).
Superintelligence mentions: 0
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