AI returns improved, but capex and cash strain persist as China adds demand and competitive pressure.

The underlying risk picture is broadly unchanged. Microsoft, Alphabet and Amazon reported strong cloud and AI-linked revenue growth, while Amazon’s trailing free cash flow turned negative as AI property-and-equipment spending rose, and Meta reported negative quarterly free cash flow alongside very high capital expenditure. China added evidence of robust compute demand and expanding open-model distribution, but export controls and chip supply constraints limit how quickly that competition can scale internationally.

• Amazon reported trailing-12-month free-cash-flow outflow of $42.4 billion after a $94.8 billion rise in property-and-equipment purchases, primarily for AI.
• Meta reported $34.9 billion of quarterly capital expenditure and negative $2.1 billion free cash flow; its 2026 capex outlook remains $135-145 billion.
• Microsoft disclosed that Azure-led growth is increasing infrastructure costs and warned that lower AI pricing, demand misalignment or underutilisation could impair returns.
• Chinese technology groups reportedly ordered more than $35 billion of export-compliant Nvidia cards, showing demand but also reinforcing supply scarcity and capital intensity.

• Alphabet’s Google Cloud revenue rose 103% year over year to $30.7 billion, led by enterprise AI infrastructure and solutions.
• Amazon AWS sales rose 39% to $46.0 billion and AWS operating income reached $17.8 billion, providing direct evidence of cloud profit conversion.
• Microsoft reported Azure revenue growth of 48% and continued premium-seat and usage-based adoption, including Copilot-related offerings.
• Equinix raised guidance as bookings, recurring revenue, pricing and delivered capacity strengthened, indicating broad infrastructure demand rather than solely speculative reservations.

• Whether hyperscaler cloud growth continues to translate into free-cash-flow recovery rather than further capex escalation.
• Whether Project Jupiter power and permitting issues change tenant commitments, construction milestones or lender protections.
• Whether Chinese GPU orders receive approvals and convert into deliveries from 2027.
• Whether cheaper Chinese open-weight models gain enterprise deployment outside China and alter pricing or workload placement.