Tech Giants' Earnings Reveal Key Trends? Fund Manager: AI Investment Wave to Drive Next U.S. Stock Rally

From Silicon Valley to Seattle, big tech companies' third-quarter results so far point in the same direction—an AI investment surge.

 

 

It's clear that AI buildout is growing at speeds no one would have imagined a few years ago. In fact, some analysts think we're seeing one of the biggest investment booms since World War II, with tech giants racing to expand their AI physical infrastructure, including data centers, chips, and power systems. This is sparking a stunning spending spike across the industry.

 

Veteran fund manager and TheStreet portfolio head Chris Versace believes this key "tailwind" could quietly fuel the next AI rebound.

 

He explains that the latest earnings from big tech firms highlight a powerful long-term theme that's been hiding in plain sight—rising capital expenditures.

 

He says Alphabet, Meta Platforms, and Microsoft's recent quarterly reports show AI demand is outstripping capacity, forcing big tech to invest heavily to keep up.

 

At Alphabet, Google Cloud sales jumped 33.5% year-over-year to $15.2 billion—impressive—and its cloud backlog grew 46% in Q3 to $155 billion. Google expects 2025 capex to rise sharply from the prior $85 billion to $91-93 billion, hinting at another "material increase" in 2026.

 

Due to stronger-than-expected demand, Meta raised its capex range this year to $70-72 billion. Spending will keep growing in 2026, with management adding it will be "materially greater" than 2025.

 

Then there's Microsoft. Despite capacity limits, Azure AI still crushed internal targets. Its commercial remaining performance obligations soared to $400 billion, up 50% year-over-year (and that excludes a $25 billion OpenAI deal).

 

Microsoft's next move is to boost AI capacity 80% this year while doubling its already massive data center footprint in two years.

 

For Versace, these numbers all point the same way.

 

"Every report is saying the same thing in different words; AI and cloud are accelerating, not peaking," he says.

 

Here are Versace's key points on AI capex:  

 

Capex is the new AI catalyst: Versace thinks the surge in big tech infrastructure spending could drive the next AI rebound.

 

Spending surging across the board: Alphabet, Meta, and Microsoft are all ramping 2025-2026 capex, with combined AI and cloud spending potentially hitting $420 billion by 2026.

 

Chipmakers will benefit: Versace notes Nvidia, Marvell, and Qualcomm remain prime winners in big tech's arms race to expand data centers and AI capabilities.

 

Finally, Versace stresses that tech's biggest leaders are sending a clear message: the AI boom isn't just a phase—it's a full-on infrastructure race. They're going all in, despite soaring costs and other pressures.