UBS Stays Bullish on Hyperscaler Stocks Despite Capex Fears

UBS has maintained its bullish stance on major cloud providers (Microsoft, Amazon, Alphabet) as their combined Q1 2026 revenue reached $84.8 billion, up 39% year-over-year, alleviating investor concerns over high capital expenditures.

UBS Rating

UBS kept 'buy' ratings on Microsoft (MSFT), Amazon (AMZN), and Alphabet (GOOGL) despite investor worries about rising capex.

Analyst Rationale

UBS analysts argue that the strong revenue growth—which accelerated by about 15 percentage points compared to the same period last year—reflects surging demand for cloud and AI services, offsetting any concerns about capital spending.

Context

The recommendation comes as tech giants race to spend billions on AI infrastructure. Some reports have raised fears that such spending could pressure profit margins. However, UBS believes the returns on these investments will materialize through revenue growth.

What to Make of It

While the debate over capex efficiency continues, the robust revenue performance supports UBS's view that demand for cloud services remains on an upward trajectory.