Alphabet and Amazon Surge as AI Spending Fuels Tech Earnings

Feb 2, 2026, 2:23 AM

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Tech giants Alphabet and Amazon are witnessing notable revenue growth as they ramp up spending on artificial intelligence (AI). Recent quarterly earnings reports highlight how these investments are reshaping their businesses, driving ad revenue and positioning them for future profitability in an evolving market landscape.

Both companies are benefitting from a robust digital advertising market, which has shown resilience amid economic uncertainties. Alphabet's overall advertising sales for the third quarter reached $74.18 billion, marking a 13% increase from the same period last year, while Amazon's online ad revenue surged 24% year-over-year to $17.7 billion. This growth is a positive sign for the digital ad sector, which had faced concerns earlier this year regarding potential budget cuts due to economic instability.

Amazon has made significant strides in expanding its advertising capabilities, with CEO Andy Jassy noting the company's partnerships that enhance its connected TV presence and ad inventory integrations with platforms like Netflix and Spotify. These initiatives are expected to bolster Amazon's ad revenue further. Meanwhile, Alphabet's YouTube platform also reported a 15% increase in ad sales, contributing to its overall revenue growth.

The escalating investments in AI infrastructure by these tech leaders are a key driver of their financial performance. In the first half of 2024, Big Tech collectively allocated approximately $104 billion to capital expenditures, primarily for AI-related projects, reflecting a 47% year-over-year increase. This figure surged to nearly $171 billion by the end of the year, marking a 56% rise compared to 2023. Such investments are indicative of a broader trend, as companies compete to deepen their AI capabilities and meet growing market demand.

Despite facing some skepticism from investors regarding the immediate returns on these expenditures, executives from Alphabet and Amazon remain optimistic about the long-term benefits of their AI strategies. Jassy expressed confidence in the sustained demand for AWS's AI services, indicating that the company is facing capacity constraints due to overwhelming customer interest. This sentiment was echoed by Alphabet's CFO, who indicated that the company expects continued growth in AI-related capital expenditures into 2025.

Market analysts have noted that while the current investment surge is substantial, there are risks associated with the volatility of tech investment cycles. Concerns over whether the projected demand will materialize have led to cautious optimism among investors, especially as companies like Microsoft and Meta face their own challenges in demonstrating the profitability of their AI ventures.

The economic impact of these investments is beginning to surface, with AI-related capital expenditures contributing 1.1% to GDP growth in the first half of 2025. This trend underscores the potential of AI to act as a new economic bellwether, influencing business investment and overall economic resilience during periods of consumer uncertainty.

As the holiday season approaches, all eyes will be on consumer spending patterns and how they may impact corporate marketing budgets. The upcoming Black Friday shopping events will serve as a crucial test for whether the lingering economic concerns will dampen consumer confidence, an essential factor for tech companies heavily reliant on advertising revenue.

In conclusion, Alphabet and Amazon are navigating a transformative phase powered by AI investments that are reshaping their revenue landscapes. While challenges remain, the significant capital outlays signal a strong belief in the long-term potential of AI to drive growth and innovation in the tech sector. The next few quarters will be pivotal in determining how effectively these investments translate into tangible returns, shaping the future of these industry giants.

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