**Market Brief: Big Tech Earnings & AI CapEx (January 2026)** **The Headline:** Investors face a new reality as of **January 29, 2026**. The "growth at any cost" era for AI has shifted to "show me the returns." While Big Tech revenue remains robust, the staggering price tag of building AI infrastructure is triggering volatility. **Microsoft: Beating Numbers, Failing Sentiment** Despite delivering a strong **Fiscal Q2 2026** report yesterday, Microsoft stock slid **>6%** in after-hours trading. * **Revenue:** **$81.3 billion** (+17% YoY), beating estimates. * **Cloud Strength:** Azure revenue grew **39%**, signaling re-acceleration driven by AI demand. * **The Problem:** Capital expenditures (CapEx) ballooned to **$37.5 billion** in a single quarter (+66% YoY). * **Takeaway:** Investors are spooked by the sheer scale of spending (primarily on GPUs and data centers) despite management’s assurance that we are only in the "beginning phase of AI diffusion." **Meta: Ad Revenue Funds the Future** Meta’s Q4 2025 report offered a different narrative, with shares holding steady/rising slightly (+0.38%) post-market. * **Revenue:** **$59.9 billion** (+24% YoY), driven by unexpected ad strength. * **Profitability:** EPS hit **$8.88** (+11% YoY). * **The AI Bet:** Meta stunned the market with a massive 2026 CapEx forecast of **$115–$135 billion**. * **Reaction:** unlike Microsoft, Meta’s core advertising engine is generating enough immediate cash to pacify investors nervous about the long-term AI bill. **Industry Trend: The $600 Billion Question** The broader market is grappling with a projected **$600 billion** in combined Big Tech infrastructure spending for 2026. * **Alphabet (Google)** reports on **February 4**, with analysts watching closely to see if their Q3 cloud momentum (34% growth) sustains against rising costs. * **The Shift:** The narrative has moved from "who is buying GPUs?" to "who can monetize them fast enough?" Microsoft’s dip suggests the market’s patience for CapEx without immediate margin expansion is running low. **Summary** Strong fundamentals are currently battling "sticker shock" on infrastructure costs. Volatility will likely persist as the market digests the gap between record spending and the timeline for AI profitability.