Meta and Alphabet Will Spend a Combined $335 Billion This Year. Don't Expect Their ROI to Be the Same.

If artificial intelligence (AI) spending wasn't already at eye-watering levels, it's officially there now. Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG) and Meta (NASDAQ: META) recently released their first-quarter financial results, and both said they're increasing their capital expenditures (capex) to a collective $335 billion this year alone.

Alphabet will spend up to $190 billion, while Meta will spend up to $145 billion, the companies said.

With an AI race currently underway, it's tempting to believe that all the spending is justified and that if investors give the companies enough time, the massive spending will pay off.

But that's simply not true for all companies, and it's increasingly looking like Meta may be on the wrong track.

Image source: Getty Images.

Not all AI spending is equal

Alphabet increased its capex range from its previous estimate, citing the need for more AI computing power. CEO Sundar Pichai said on the company's earnings call that "we are compute constrained in the near term."

Alphabet has its own popular AI model, Google Gemini, and sells AI cloud services to companies through its Google Cloud business and its suite of workplace apps.

Google Cloud revenue soared 63% in Q1 to just over $20 billion, and management highlighted on the earnings call that enterprise AI services were the primary driver of that growth. What's more, Gemini Enterprise's monthly active users jumped 40% from the previous quarter.

It's easy to see from both of those metrics how intertwined Alphabet's AI spending is with the company's growth. Gemini is one of the top AI models available, and the company's Google Cloud is the third-largest cloud computing service behind Amazon and Microsoft.

And then there's Meta's spending.

It also increased its capex spending estimate for this year up to $145 billion -- nearly double what it spent in 2025. But Meta CEO Mark Zuckerberg sounded a lot less focused on how that spending will translate into growth.

When analysts pressed him on the earnings call about how the company will know it's getting a good return on all of that spending, Zuckerberg responded with, "That is a very technical question."

He added, "I do not think we have a very precise plan for exactly how each product is going to scale month over month or anything like that." Oof, that's not exactly what you want to hear when capex spending doubles in one year.

So, to recap, Alphabet's cloud sales are surging because of AI, and it already has a top AI model with growing paid monthly users. Meanwhile, Meta is essentially in the "it's complicated" phase of its relationship with AI.

Investors aren't buying it

To be fair, Meta reported solid financial results, with revenue rising 33% to $56.3 billion and net income jumping 61% to $26.7 billion.

But investors weren't buying into the company's AI bets.

Meta's shares fell about 10% in the first two days after announcing its spending spree. Alphabet's stock, on the other hand, rose more than 10%.

Investors are wisely assessing that Meta is overspending without any clear plan for how it will earn that money back. And it's a perfect example of how some companies are going all in on artificial intelligence without really knowing what they're doing.

It's fine to not know what AI will look like in the next five years. But if you're a publicly traded company and you're going to spend hundreds of billions of dollars on the tech, then you better darn well know how you plan to earn that money back.

Meta is already using its AI to improve ads, develop more tools for its users and advertisers, explore agentic capabilities for users, and develop its smart glasses.

But unlike Alphabet, it's not clear to investors how its current AI spending will benefit those businesses in a way that justifies the cost.

What's become clear for Meta is that Zuckerberg will need to do a lot more to ease investor concerns that the company's AI strategy is moving in the right direction -- and have a slightly more technical answer on how hundreds of billions of dollars in spending will help the company grow revenue and become more profitable.

Chris Neiger has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon, Meta Platforms, and Microsoft. The Motley Fool has a disclosure policy.