Barclays data shows Q3 capital expenditures for hyperscalers hit record levels, yet most Magnificent Seven stocks trail the S&P 500 in 2026.
Investors are bracing for third-quarter earnings from Microsoft, Amazon, and other hyperscalers as capital expenditures reach an all-time high. Barclays strategists highlight that Big Tech’s AI spending surge, projected to exceed $700 billion this year, has yet to translate into proportional sales or profit growth.
Despite aggressive infrastructure investments in data centers and GPUs, most Magnificent Seven stocks underperform the S&P 500 in 2026. Alphabet is the sole exception, posting a 15% year-to-date gain versus the index’s 9.5% advance. Oracle’s stock hovers near a 52-week low, reflecting broader skepticism over returns on AI spending.
Wall Street’s patience is wearing thin as capital expenditures rise 70% year-over-year, cannibalizing corporate margins without clear revenue upside.