Today is the biggest test yet for the AI boom. Microsoft and Alphabet report quarterly earnings after the market closes on Wednesday, October 28, 2026, Amazon follows on Thursday, and investors will be asking one question above all: is the hundreds of billions of dollars pouring into AI infrastructure turning into real revenue and profit — or just bigger bills?
The backdrop arrived overnight, and it was spectacular. SK hynix, the South Korean chipmaker that supplies high-bandwidth memory used alongside AI processors, reported preliminary third-quarter operating profit of 83.3 trillion won — up 632 percent from a year earlier — on revenue of 104.6 trillion won, up 328 percent. Its operating margin was 80 percent. Those are the profits of the company selling the shovels. Today, the companies buying the shovels have to show their own numbers.
The $725 billion question
Alphabet, Amazon, Microsoft and Meta have indicated combined 2026 capital spending of roughly $725 billion to $745 billion, according to an analysis published on October 28 that sums their guidance. Alphabet alone raised its guidance twice and now plans $195 billion to $205 billion; Amazon is around $220 billion after raising its plan in July, citing memory prices; Microsoft is around $175 billion for calendar 2026; Meta is $135 billion to $145 billion.
That spending is why earnings season feels different this year. FactSet’s blended estimate, cited in the same analysis, puts S&P 500 third-quarter earnings growth at about 29 percent — but removing just two chipmakers, Micron and Nvidia, cuts that estimate to 20 percent. The Magnificent Seven’s growth is estimated at 33.2 percent, but without Nvidia and Meta it falls to 7.5 percent. In other words, the boom is real, but it is narrow — and it depends on a handful of companies.
What to watch in each report
For Alphabet, watch cloud growth and whether its huge capital spending is producing matching cloud revenue, plus any update on its 2027 spending plans, which it has already flagged as a “significant” increase. For Microsoft, watch Azure cloud growth and how much of its AI investment is showing up as revenue rather than cost. For Amazon on Thursday, watch its cloud unit AWS and whether its raised spending is paying off in the same way.
There is also a trap in the headline numbers, flagged in earnings previews this week: last quarter, all three companies’ reported profits were inflated by gains on investments in other AI companies. Alphabet’s second-quarter earnings per share of $9.11 included a $6.26 gain from equity securities; Amazon’s included $53.4 billion of non-operating other income, primarily from its Anthropic investment; Microsoft reported a $3.2 billion gain from its Anthropic stake. When today’s headlines say a company “beat” or “missed,” check whether they are comparing GAAP earnings, adjusted earnings, or operating income — the three can tell very different stories.
Signs of strain — and signs of confidence
But debt markets are watching closely. The cost of insuring Meta’s debt is up 177 percent this year and Amazon’s up 129 percent, according to the October 28 analysis, and Oracle carries $117 billion in long-term debt. SK hynix itself said long-term agreements with 14 major customers cover more than half of its 2027 and 2028 capacity, and it expects demand to exceed supply through 2030 — a company forecast, not a guaranteed outcome.
Key takeaways
- Reporting today: Microsoft and Alphabet, after market close on October 28; Amazon on Thursday, October 29.
- Backdrop: SK hynix preliminary Q3 operating profit up 632 percent to 83.3 trillion won, revenue up 328 percent.
- Combined 2026 capital spending guidance for Alphabet, Amazon, Microsoft and Meta: roughly $725–745 billion.
- Watch out: last quarter’s headline profits were inflated by investment gains — compare like with like.
- The test: whether cloud and AI revenue growth justifies the spending, or whether investors start asking for restraint.
Bottom line: The chipmakers have already proven the AI boom is profitable — for them. Today and tomorrow, the cloud giants have to prove it is profitable for the companies actually buying the chips. That is the test this earnings week was always going to be.
