Michael Burry highlighted a shift in Wall Street sentiment toward Big Tech artificial intelligence spending, with investors favoring companies delivering stronger returns over those making larger capital commitments. The 'Big Short' investor posted on X last week, sharing Bloomberg charts showing Alphabet Inc., Microsoft Corp., Amazon.com Inc., Meta Platforms Inc., Oracle Corp., Micron Technology Inc., and Tesla Inc. all detracting from the S&P 500 index's performance since the start of June. Apple Inc. emerged as the sole major positive contributor during this period amid its comparatively restrained AI spending approach. The divergence follows rising AI capital expenditure announcements from Big Tech firms, with Alphabet raising its fiscal year 2026 capex forecast to $195 billion to $205 billion last week from a previous estimate of about $180 billion to $190 billion.
Alphabet and Tesla Face Post-Earnings Selloffs on Capex Increases
Alphabet shares fell over 7% on Thursday last week after the company raised its fiscal year 2026 capex estimates to about $205 billion, with investors looking past better-than-expected second quarter earnings. The company had previously forecast capex of $180 billion to $190 billion during its first-quarter earnings.
Tesla shares plummeted about 15% on Thursday after the EV company delivered a mixed quarter. CEO Elon Musk told analysts during a post-earnings call that 2026 is a "massive capex year," while CFO Vaibhav Taneja stated Tesla will spend over $25 billion in capex during the year. Taneja added that Tesla's capex will grow over the next two to three years.
Data compiled by Bloomberg showed that Big Tech companies with the largest forward 12-month capital expenditure estimates have been among the biggest drags on the S&P 500 since the start of June. Apple, with a relatively modest capex outlay, has been a net contributor to the index during this period.
Apple Leads Mag 7 Stocks Performance Year-to-Date
Apple shares have performed the best in 2026 so far, outpacing AI frontrunners including Nvidia, Alphabet, Microsoft, Meta, and Amazon. The company posted a +22.5% year-to-date return, while Nvidia gained +10.91%, Alphabet +2.15%, Amazon +0.56%, Meta -9.83%, Microsoft -21.07%, and Tesla -30.39%.
Per the Bloomberg report, Meta, Microsoft, Amazon, and Alphabet are cumulatively expected to spend about $724 billion on capex this year and nearly $950 billion in 2027.
The S&P 500 ETF is up 16% over the past 12 months, while the Invesco QQQ Trust is up 21%.
Morgan Stanley and Dan Ives Maintain Bullish AI Adoption Outlook
Morgan Stanley strategist Michael Wilson said in a recent note that margin expectations are improving most clearly for companies integrating AI capabilities, per a Bloomberg report. "The outlook for AI adopters is becoming increasingly compelling. This is especially important because several industries often viewed as vulnerable — including transports, software & services, and professional services — also rank among the more attractive adopter groups," Wilson and his team stated in the note.
Last week, tech strategist Dan Ives said that the AI capital expenditure boom remains "full steam ahead" after the latest quarterly results from Tesla and Alphabet. Ives added that while higher AI infrastructure spending may weigh on margins in the near term, accelerating adoption of AI by both enterprises and consumers will be a key theme of Q2 earnings. He stated that while this may test investor patience, capex will drive the future.
FAQ
What did Michael Burry say about Big Tech AI spending and the S&P 500?
Michael Burry posted on X last week stating "The market has voted and the results are clear," highlighting Bloomberg charts showing Alphabet, Microsoft, Amazon, Meta, Oracle, Micron, and Tesla all detracting from the S&P 500 index's performance since the start of June. Apple stood out as the lone major positive contributor amid its comparatively restrained AI spending strategy.
How much capex did Alphabet and Tesla announce for fiscal year 2026?
Alphabet raised its fiscal year 2026 capex forecast to $195 billion to $205 billion last week, up from its previous estimate of about $180 billion to $190 billion. Tesla CFO Vaibhav Taneja stated Tesla will spend over $25 billion in capex during 2026, with CEO Elon Musk calling it a "massive capex year."
Which Mag 7 stock has performed best year-to-date in 2026?
Apple has performed the best among Mag 7 stocks in 2026 year-to-date with a +22.5% return, outpacing Nvidia (+10.91%), Alphabet (+2.15%), Amazon (+0.56%), Meta (-9.83%), Microsoft (-21.07%), and Tesla (-30.39%).
