Tech leaders ramp up AI spending, but Alphabet’s cash flow wins investor favor

Three of the biggest U.S. technology companies flagged plans on Wednesday to accelerate capital spending over the next year but investors were most accepting of Google-parent Alphabet's ability to fund its plans from its cash flow.



Alphabet, Microsoft and Facebook-owner Meta all announced plans for higher annual capital expenditures as they pour money into chips and data centers.

Shares of all three have risen substantially this year on expectations that they will be winners in the AI race, but investors only cheered Alphabet's report as they calculated the costs to each firm of the investments.



All three reported stellar revenue growth in their key businesses, but investors pushed Alphabet shares up 7.3% while knocking down Microsoft by 3% and Meta by 7% in premarket trading.



A key reason for this, analysts say, is Alphabet's ability to balance its soaring expenses with strong cash flow.



Alphabet's capital expenditure of $23.95 billion in the September quarter was 49% of its cash generated from operations. The percentage for Meta, however, is 64.6%, with Microsoft even higher at 77.5%.