Raymond James says tech giants' AI spending plans support chip suppliers

Investing.com -- Raymond James said Thursday that Google and Microsoft both confirmed strong demand and accelerating AI and cloud growth, with continued infrastructure investment plans despite capital expenditure figures coming in below expectations.

Google maintained its 2026 capital expenditure outlook of $195 billion to $205 billion and expects another large increase in 2027. Microsoft reduced its calendar year 2026 outlook to approximately $170 billion due to delayed third-party capacity deliveries, with spending expected to accelerate in later quarters.

AI demand continues to exceed available capacity, according to the firm. Google Cloud revenue growth accelerated to 103% year-over-year and Azure growth reached 48% year-over-year, with guidance for 49% to 50% next quarter.

Oracle maintained its fiscal year 2027 gross capital expenditure guidance of $90 billion to $95 billion at its analyst meeting Thursday. The company indicated peak spending in fiscal years 2027 and 2028, which appears consistent with Street expectations of approximately $106 billion in fiscal year 2028.

Oracle updated its external funding forecast to $20 billion through fiscal year 2030, below the approximately $40 billion anticipated by the Street. The company said customer prepayments, vendor financing and customer-provided hardware contributed to this outlook.

Raymond James said supply constraints, particularly in networking equipment, fiber and power, should continue to influence deployment schedules.

The firm identified several companies with exposure to this spending cycle. Microsoft remains a major growth driver for Arista Networks (NYSE: ANET), while Google deployments and Microsoft demand through Lumen support growth for Ciena (NYSE: CIEN). Broadcom (NASDAQ: AVGO) gains from Google and Oracle TPU demand and Ethernet switching silicon.

Applied Optoelectronics (NASDAQ: AAOI) counts Microsoft as a major customer, and Oracle could become its first 1.6T customer in December, the firm said. Advanced Micro Devices (NASDAQ: AMD) EPYC benefits from server growth, with Helios racks expected to ramp in December into Oracle.

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