26MAY

Hyperscalers post record $110.75bn Q1 capex

4 min read

11:34UTC

Microsoft, Alphabet, Amazon and Meta together spent $110.75bn on capital projects in the first 90 days of 2026, with two of the four raising full-year guidance even as OpenAI trimmed its own compute commitment.

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Key takeaway

Alphabet and Meta raised guidance after OpenAI's retreat; Q2 earnings will test whether the divergence holds.

Amazon, Alphabet, Microsoft and Meta posted combined Q1 2026 capital expenditure of $110.75bn when results landed on Wednesday 29 April ¹. Amazon led at $44.2bn, followed by Alphabet at $35.7bn (up 107% year-on-year) and Microsoft at $30.88bn. Meta did not break out a separate Q1 number but raised its full-year range to $125-145bn, citing 'higher component costs and expanded data-centre capacity'. Alphabet raised full-year guidance to $180-190bn; on Amazon's earnings call Andy Jassy committed the company to roughly $200bn for the year.

The four are the cloud platforms on which OpenAI, Anthropic, xAI and the bulk of the enterprise AI market run their training and inference workloads. Q1 capex of this scale is the cleanest signal that boards approved their 2026 build plans before OpenAI's revision became visible, and chose not to walk them back when it did. Sundar Pichai told Alphabet's earnings call the company is 'compute constrained in the near term' with cloud backlog above $460bn, a figure that gives the raised guidance an underwriter rather than a speculator: the backlog is contracted demand, not modelled forecast.

The aggregate now firms above the $725bn annual figure flagged at the end of April . What it cannot yet answer is whether the spend reflects confidence in the demand profile or fear of being short on capacity when transformer slots close in 2027. Meta's component-cost reference points to the second reading; Pichai's backlog number points to the first. The two are not mutually exclusive, but the test arrives in the late-July Q2 earnings cycle, when boards will reset guidance against a quarter that has fully digested the OpenAI retreat.

The Microsoft figure carries a methodological caveat that matters for sectoral totals: Microsoft does not split data-centre capex from broader Azure spend in its 10-Q, so the $30.88bn includes an undisclosed non-DC portion. The combined $110.75bn is therefore an upper bound on the data-centre slice. Even on the more conservative read, the quarter is the largest concentrated build commitment the sector has posted, and it travels into Q2 against a softer OpenAI demand signal.

Deep Analysis

In plain English

Amazon, Google's parent company Alphabet, Microsoft, and Meta all reported how much they spent on data centres and cloud infrastructure in the first three months of 2026. Together they spent $110.75 billion, roughly the GDP of a mid-sized European country, in a single quarter. Two of them, Alphabet and Meta, also raised their spending targets for the whole of 2026. This is happening at the same moment that OpenAI, which relies on their infrastructure, just cut its own spending plans significantly. The companies building the data centres and the company that was supposed to fill them are now moving in opposite directions.

Deep Analysis

Root Causes

Alphabet's 107% year-on-year capex increase reflects a structural inflection that began in Q3 2024: the decision by Fortune 500 boards to commit to multi-year cloud AI contracts drove Google Cloud's backlog from roughly $250bn to $460bn in under eighteen months. That contracted demand obligates Alphabet to build the capacity; the Q1 capex is the execution of commitments already on the books, not speculative positioning.

Meta's component-cost reference exposes a second structural driver: GPU server lead times running 12-18 months mean boards that want 2027 capacity must commit 2026 capex now, regardless of what OpenAI's revised trajectory signals about 2030 demand. The two dynamics, contracted cloud backlog and hardware lead-time arbitrage, explain why no hyperscaler revised guidance downward despite OpenAI's revision.

What could happen next?

Risk
If Q2 guidance is held or raised again, capital markets will price hyperscaler equity against a demand curve that may be thinner than the build programme assumes.
Short term · 0.7
Consequence
Amazon's $200bn FY commitment, the largest single-company annual capital programme on public record, sets the ceiling against which all grid and equipment suppliers will price their 2027-2028 order books.
Medium term · 0.85
Opportunity
Alphabet's $460bn contracted cloud backlog provides a demand underwriter for its capex that other hyperscalers cannot match on a disclosed basis, making it the most defensible large-capex story into 2027.
Medium term · 0.75

Source Landscape

This story draws on neutral-leaning sources

Primary parallel: The 2000-2001 telecom capex cycle saw WorldCom, Global Crossing and MCI commit $80bn+ in a single year to fibre build-out, justified by traffic doubling projections that were real but whose timing was wrong by 24-36 months.

The hyperscaler Q1 2026 aggregate is structurally parallel: demand is real, but the build cycle is committing capital against a 2028-2030 demand curve in a market where two-year shifts in inference architecture or model efficiency can change the required compute per revenue dollar.

Counter-parallel: Unlike the telcos, hyperscalers have $460bn of contracted cloud backlog (Alphabet alone) and diversified revenue not exposed to a single bet. The 2000 fibre glut had no contracted demand beneath it; the 2026 hyperscaler build has enterprise AI commitments that are multi-year, not speculative.

The combined $110.75bn Q1 print puts the four on a trajectory of roughly $440bn for 2026 if Q1 is the base rate, already above the $725bn annual aggregate flagged in late April on a pro-rated basis. Amazon's commitment of roughly $200bn for the full year is the single largest annual capital programme any company has publicly disclosed, exceeding Saudi Aramco's 2022 programme of $175bn.

For equipment vendors, the aggregate firms their order books through 2028 at minimum. Wood Mackenzie estimates a 30% power transformer deficit in 2026; at Q1 capex rates, every percentage point of that deficit costs the sector roughly $13bn in deferred commissioning value. The Microsoft caveat on methodology matters for analysts: the $30.88bn includes non-DC Azure spend, so the true DC-specific aggregate is somewhat below $110.75bn, though still a record.

Consensus view: Synergy Research Group's John Dinsdale tracks quarterly hyperscaler capex as the most reliable leading indicator of colocation and power demand; the $110.75bn Q1 combined print, up from roughly $62bn in Q1 2025, confirms the sector passed an inflection point in late 2025 that board cycles are now executing against regardless of tenant-level signals. Alphabet's $460bn cloud backlog is contracted demand, not projected demand.

Counter-view: Asianometry (Jon Y) notes that hyperscaler capex at this scale is disproportionately concentrated in GPU server procurement and campus land banking, both of which have 18-to-36-month commissioning tails. The Q1 spend figure tells you what boards approved in 2024, not what will be energised in 2026.

The Malaysian and Johor moratorium shows the same capex wave is meeting resistance in Southeast Asia, where supply-chain concentration in TSMC and Samsung fabs creates a second bottleneck behind the transformer queue.

Key tension: Whether Alphabet and Meta's raised full-year guidance signals that hyperscaler demand has genuinely absorbed the OpenAI retreat, or whether the guidance was set before Q2 models could price the revision and will be walked back in the late-July earnings cycle.

Sources:The Next Web

Mentions:Microsoft →Alphabet →Amazon →Meta →Andy Jassy →Sundar Pichai →Google →Synergy Research Group →Johor →Anthropic →Samsung →TSMC →OpenAI →Azure →

First Reported In

Update #3 · OpenAI cuts $800bn; rivals double down

The Next Web· 16 May 2026

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Causes and effects

Caused by

Hyperscalers raise 2026 capex to $725 billion

The prior $725bn combined hyperscaler capex figure firmed into a higher number as Meta and Alphabet raised full-year guidance in Q1 earnings.

Occurred 30 Apr 2026

Read story →

OpenAI cuts compute target by $800bn

OpenAI's retreat from owned build positions redirected demand toward leased colocation, reinforcing hyperscaler capex at the same moment OpenAI's own commitment compressed.

Occurred 28 Apr 2026

Read story →

This Event

Hyperscalers post record $110.75bn Q1 capex

The four largest cloud operators are now visibly building for a demand curve their largest individual customer has just shortened, exposing the gap between hyperscaler quarterly capex cycles and tenant compute commitments.

Different Perspectives

Data-centre developers and hyperscale operators

Hill County's rescission on 4 June, seven days after RCM Hill filed a $100 million taking suit, shows the Fifth Amendment threat is faster than any appellate route: the damages clock runs from the day the moratorium passed. Rural counties with no large-load permitting framework face a litigation bill that can exceed their entire annual budget.

Kenya and President Ruto

Kenya's suspension of the $1 billion Microsoft-G42 Olkaria project in early May applies raw-capacity logic at national scale: President Ruto stated the full 1 GW build would mean switching off half the country against a 3 GW installed base. A single hyperscale campus can consume a third of a Sub-Saharan grid with no equivalent constraint in Europe.

Denmark and Energinet

Energinet's 27 May extension of its large-load connection pause, with a 60 GW queue against 7 GW peak demand, demolishes the assumption that surplus renewable generation is a relief valve for compute demand. Denmark has more wind than it can use and still cannot connect data centres, because transmission pace is the binding constraint.

France and EDF

EDF's repurposing of the Bouchain former power-station site for SoftBank's Phase 1 campus gives France a replicable siting instrument, a brownfield nuclear connection bypass, that no other G7 grid operator can match. France's Choose France summit on 30 May secured the boom's largest European bet without a connection-queue fight or community moratorium.

SoftBank Group

SoftBank's EUR 75 billion France commitment on 30 May anchors at EDF's Bouchain nuclear baseload, bypassing the UK's four-times-US electricity cost premium (cited by OpenAI as reason to pause Cobalt Park) and Germany's grid-queue delays. EDF's supply relationship is bilateral; SoftBank never enters the French connection queue.

US residential ratepayers and state regulators

Portland General Electric's 4 June tariff is the first evidence that PJM's cost-transfer warning to governors on 19 May can run in reverse: Oregon households get a 1.3% bill reduction as data centres absorb their grid costs. The 12 other states carrying active cost-attribution bills now have a filed tariff with actual numbers to cite.