Microsoft announces Azure demand as Amazon invests $200 billion

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US tech companies are gearing up for substantial investments in artificial intelligence, with plans to spend an estimated $700 billion on AI infrastructure in 2026. This significant capital outlay is already driving economic growth, contributing entirely to the 1.4% GDP increase in the fourth quarter of 2026, highlighting AI's pivotal role in the economy.

Several key players are benefiting from this surge. Applied Materials, a crucial supplier for AI chip manufacturing, has seen its stock climb over 100% in the last six months, with analysts projecting 20% revenue growth. Cisco Systems also reports strong performance, securing over $2 billion in AI infrastructure orders, leading to a 17% stock increase in six months. Applied Digital is expanding its footprint by building specialized AI data centers, securing $16 billion in potential lease revenue.

Microsoft delivered strong fiscal Q2 2026 earnings, surpassing profit expectations with adjusted EPS of $4.14 and a 17% revenue increase. Demand for its cloud services and AI offerings, particularly its Azure platform, exceeds current capacity, reinforcing its strong position despite concerns over increased AI capital expenditures. Meanwhile, Amazon plans to invest $200 billion in AI data centers in 2026, boosting its custom chip business, which is now valued at over $10 billion and growing rapidly, with chips like Trainium seeing high demand.

Investors are closely watching Nvidia's upcoming Q4 2025 earnings report, as the semiconductor giant is expected to show strong results driven by massive hyperscaler spending on AI infrastructure. Morningstar currently rates Nvidia's stock as moderately undervalued with a fair value estimate of $240 per share. In the AI software sector, Palantir Technologies is outperforming competitors like BigBear.ai, reporting a significant 56% revenue growth in 2025, reaching $4.475 billion, fueled by its advanced platforms like AIP.

As the AI market expands, Citigroup advises investors to consider bonds and small-cap stocks to navigate potential uncertainties, also recommending companies in the industrials and materials sectors. Beyond enterprise applications, AI is also transforming creative fields, with studios like OneDay utilizing AI tools for rapid prototyping in filmmaking, demonstrating its diverse impact across industries.

Key Takeaways

US tech companies plan to spend $700 billion on AI infrastructure in 2026.
AI investment was the sole driver of US economic growth in Q4 2026, contributing 1.4% to GDP.
Applied Materials' stock rose over 100% in six months due to demand for AI chip manufacturing equipment, with 20% revenue growth expected.
Microsoft reported strong fiscal Q2 2026 earnings with 17% revenue growth, driven by cloud and AI services, with demand exceeding capacity.
Amazon plans to spend $200 billion on AI data centers in 2026, growing its custom chip business (e.g., Trainium) to over $10 billion.
Cisco Systems secured over $2 billion in AI infrastructure orders, contributing to a 17% stock increase in six months.
Nvidia's upcoming Q4 2025 earnings are highly anticipated, with Morningstar rating its stock as moderately undervalued at $240 per share.
Palantir Technologies achieved 56% revenue growth in 2025, reaching $4.475 billion, driven by its advanced AI platforms like AIP.
Applied Digital is building specialized AI data centers, securing $16 billion in potential lease revenue.
Citigroup advises investors to consider bonds and small-cap stocks to navigate AI market uncertainties.

Applied Materials stock climbs on AI chip demand

Applied Materials, a key supplier for the AI industry, has seen its stock rise over 100% in six months. The company provides essential equipment for AI chip manufacturing, benefiting from increased spending by tech giants like Taiwan Semiconductor Manufacturing and SK Hynix. Despite a strong run-up, analysts believe the stock is fairly priced, with expectations of 20% revenue growth in the next two years.

Applied Materials stock rises on AI chip demand

Applied Materials' stock has climbed over 100% in the last six months due to high demand for AI chips. The company is a major supplier of essential equipment for semiconductor foundries like Taiwan Semiconductor Manufacturing. Despite its stock appreciation, analysts suggest it remains a fair investment with projected 20% revenue growth for the next two years.

AI spending to hit $700 billion in 2026

US tech companies plan to spend $700 billion on AI infrastructure in 2026, a significant increase from last year. Applied Materials is benefiting from this trend, with strong revenue and earnings growth expected. Applied Digital is also poised for growth by building specialized AI data centers, securing $16 billion in potential lease revenue.

Microsoft beats Q2 estimates on cloud and AI growth

Microsoft reported strong fiscal Q2 2026 earnings, exceeding profit expectations with adjusted EPS of $4.14. Total revenue increased by 17%, driven by high demand for its cloud services and AI offerings. The company's Azure cloud platform continues to grow, boosted by the adoption of AI-powered services, reinforcing investor confidence in Microsoft's position in the AI market.

Microsoft stock dip offers buying chance

Microsoft's Q2 earnings surpassed expectations with 17% revenue growth, but its stock dipped due to concerns over AI capital expenditures and Azure growth. The company's CFO stated that demand for its cloud and AI services exceeds current capacity. Despite increased spending, long-term growth projections remain strong, with analysts maintaining a 'Strong Buy' rating and a price target of $618.06.

Nvidia earnings report key for AI stock market

Investors are closely watching Nvidia's upcoming earnings report amid a shaky start for the tech sector in 2026. The semiconductor giant is expected to deliver strong results due to increased AI infrastructure spending by hyperscalers. While Nvidia's stock has seen modest gains this year, its performance significantly influences major indexes like the S&P 500.

Amazon's AI chip spending benefits Marvell Technology

Amazon plans to spend $200 billion on AI data centers in 2026, boosting its custom chip business which is now valued at over $10 billion and growing rapidly. While Nvidia remains a key supplier, Amazon's custom chips like Trainium are seeing high demand. Marvell Technology, a partner in designing these chips, could benefit despite recent reports of diminishing influence.

Cisco stock rises on AI infrastructure orders

Cisco Systems' stock has increased by 17% in the last six months, driven by substantial orders for AI infrastructure totaling over $2 billion. The company is also experiencing accelerated growth in its core networking business. This strong performance has raised questions about the sustainability of the rally and Cisco's future in the AI sector.

Nvidia stock fairly valued ahead of earnings

Nvidia is set to release its fiscal Q4 2025 earnings on February 25th. Analysts expect strong results driven by massive hyperscaler capital expenditures for AI infrastructure in 2026. Despite its wide economic moat and strong financial health, Morningstar rates Nvidia's stock as moderately undervalued with a fair value estimate of $240 per share.

Citigroup advises bonds and small caps for AI market

Citigroup suggests investors navigate AI market uncertainties by focusing on bonds and small-cap stocks. The bank's strategists believe this approach can mitigate risks associated with the AI boom, which has heavily favored chipmakers and tech giants. They also recommend considering companies in the industrials and materials sectors that may indirectly benefit from AI advancements.

AI investment drives US economic growth

Artificial intelligence investment was the sole driver of US economic growth in the fourth quarter of 2026, contributing all of the 1.4% GDP increase. Even accounting for potential government shutdown effects, AI represented nearly 60% of the economy's growth. Bitdeer Technologies Group plans to expand its cryptocurrency mining data centers into AI data centers by the end of the decade.

Palantir stock outperforms BigBear.ai in AI software

Palantir Technologies is outperforming BigBear.ai in the AI software market, driven by its advanced platforms like AIP. Palantir reported significant revenue growth of 56% in 2025, reaching $4.475 billion, with strong deal closures. BigBear.ai, while growing, operates on a much smaller scale and has seen its stock price decline over the past year.

AI revolutionizes filmmaking with OneDay studio

Filmmakers Samir Mallal and Bouha Kazmi are using AI to create cinematic content efficiently through their studio, OneDay. AI tools allow for rapid prototyping and overcome traditional production barriers, enabling stories that were previously impossible to film. They emphasize that human craft, creativity, and emotional nuance remain essential in the AI-assisted filmmaking process.