As investment related to AI continues, the third-quarter results from Alphabet, Amazon and Intel drew market attention to their respective profitability and cash generation, marking a period in which the relationship between AI capital investment and cash flow is being assessed more rigorously.
The performance of tech stocks over the past week has shown that revenue growth alone cannot change market valuations, and investors are placing greater emphasis on whether AI investment leads to actual cash generation. Alphabet continues to deliver revenue growth, while free cash flow turned negative, leaving investors to assess the balance between progress in monetisation and capital investment.
Amazon's revenue increased and AWS growth was also notable, but free cash flow over the past 12 months turned negative as capital spending and investment in AI infrastructure expanded. Capital expenditure for 2026 is expected to be approximately $220 billion. Intel's third-quarter revenue increased, but its outlook for the next quarter disappointed the market, putting the ability to achieve both growth and profitability in its data center/AI business under scrutiny.
The market is increasingly differentiating between companies surrounding AI infrastructure, such as Nvidia and Broadcom, and companies with cloud and earnings growth, such as Microsoft and Alphabet. In upcoming earnings announcements, investors are expected to focus increasingly not only on revenue growth but also on free cash flow, gross margins and the sustainability of guidance.
Apple, Palantir Technologies and AMD are scheduled to report next week, while Uber, Qualcomm, Arm and ABNB are also attracting attention. Investors will also be watching whether earnings-related implied volatility and the expansion of after-hours trading could influence price movements following the earnings announcements.