According to a research report released by China Securities Co., Ltd., capital expenditures among top North American cloud providers continued to see strong growth in the second quarter of 2026. For the full year 2026, the combined capex guidance from the four major North American cloud firms totals approximately $720 billion to $745 billion, reflecting their ongoing expansion around AI infrastructure.
At present, the AI computing power supply chain remains vibrant, but the market has recently experienced notable corrections, creating oversold conditions. Looking ahead, it is recommended to monitor several key areas: first, the annual recurring revenue (ARR) of large models, particularly in coding scenarios, given recent price reductions and promotions by North American models. If ARR growth encounters near-term bottlenecks, it could impact expectations for future computing demand; second, beyond coding, the deployment and development of large models in other application scenarios; third, the price trajectory of the computing power inflation chain in the coming period; and fourth, the financing situation and market risk appetite across various segments of the AI supply chain. Additionally, given the heavy positions in the AI supply chain during the second quarter and recent market adjustments showing signs of rotation from high to low valuations, it is advisable to focus on undervalued, high dividend yielding stocks.
Key viewpoints from China Securities Co., Ltd. are as follows:
In the second quarter of 2026, capital expenditures of major North American cloud providers continued to climb rapidly. The quarterly capex for AWS, Microsoft (MSFT.US), Google (GOOGL.US), and Meta stood at approximately $54.2 billion, $41 billion, $44.9 billion, and $31.1 billion respectively, totaling $171.2 billion, maintaining strong sequential and year-over-year growth. For the full year, Amazon's total capex guidance was raised to about $220 billion, up from the previous plan of roughly $200 billion. Microsoft's guidance is approximately $175 billion on a calendar year 2026 basis, with reporting adjustments as some data center leases shift from finance leases to operating leases. Alphabet's capex is expected between $195 billion and $205 billion, with a midpoint of $200 billion. Meta's capex is guided between $130 billion and $145 billion, with a midpoint of $137.5 billion, including principal repayments on finance leases. For the full year 2026, the combined capex guidance from these four North American cloud firms totals roughly $720 billion to $745 billion, with a midpoint of approximately $732.5 billion, a significant increase from the $710 billion midpoint in the first quarter's guidance. This indicates that North American cloud providers are persistently expanding investments in AI servers, GPU clusters, data centers, and power and network infrastructure, with AI infrastructure construction continuing at a vigorous pace.
In the second quarter of 2026, cloud and AI-related business revenues of major North American cloud providers sustained high growth. AWS, Microsoft Intelligent Cloud, and Google Cloud generated revenues of $42.2 billion, $39.3 billion, and $24.8 billion respectively, marking year-over-year increases of approximately 37%, 32%, and 82%. Combined, these three segments totaled about $106.3 billion, up roughly 43% year-over-year and 15% sequentially. Among these, AWS's growth rate reached an 18-quarter high, with its AI business annualized revenue exceeding $25 billion and maintaining triple-digit growth. Microsoft's broader Microsoft Cloud revenue reached $59.3 billion, up 27% year-over-year, while Azure and other cloud services revenue grew 43%. Google Cloud's revenue growth accelerated significantly, driven by GCP, AI solutions, AI infrastructure, and TPU system sales. Meta's total second-quarter revenue was $60.8 billion, up 28% year-over-year, including advertising revenue of $59.4 billion, up 27%, indicating that its AI investments are currently generating indirect returns through enhanced recommendation algorithms, advertising efficiency, and user engagement. Overall, AI revenue growth for North American cloud providers is expanding from computing power leasing to model services, enterprise AI applications, and advertising efficiency improvements. The robust revenue growth provides fundamental support for sustained increases in capital expenditure.
At present, the AI computing power supply chain remains in a robust phase, but the market has recently experienced notable corrections, creating oversold conditions. Looking ahead, it is recommended to monitor several key areas: first, the ARR of large models, particularly in coding scenarios, given recent price reductions and promotions by North American models. If ARR growth encounters near-term bottlenecks, it could impact expectations for future computing demand; second, beyond coding, the deployment and development of large models in other application scenarios; third, the price trajectory of the computing power inflation chain in the coming period; and fourth, the financing situation and market risk appetite across various segments of the AI supply chain. Additionally, given the heavy positions in the AI supply chain during the second quarter and recent market adjustments showing signs of rotation from high to low valuations, it is advisable to focus on undervalued, high dividend yielding stocks.
Risk Warnings
Changes in the international environment could impact the security and stability of supply chains, as well as the pace of overseas expansion for related companies. Tariff impacts may exceed expectations. The development of the AI industry may fall short of expectations, affecting demand for companies in the cloud computing supply chain. Intensified market competition could lead to a rapid decline in gross margins. Exchange rate fluctuations could affect the exchange gains and currency translation margins of export-oriented companies, including those in the ICT equipment and optical module/device sectors. The construction and development of the digital economy and digital China may lag behind expectations. The cloud computing business development of telecom operators may underperform. Operator and cloud provider capital expenditures may fall short of expectations. Demand in the communication module and intelligent controller industries may be weaker than anticipated.
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