Motley Fool recommends buying Amazon and Alphabet, avoiding Microsoft

Investors are being advised to add Amazon and Alphabet to their portfolios while avoiding Microsoft, according to a new analysis from The Motley Fool. The recommendation comes after a review of each company’s AI strategy, market position, and capital spending plans.

Amazon and Microsoft lead the cloud market with 28 % and 20 % of the market share, respectively, and Alphabet holds a 15 % share. All three firms have pushed AI into almost every part of their businesses. Alphabet has built its own silicon and launched the Google Gemini engine, and its Waymo unit is poised to generate revenue by 2027. Amazon and Microsoft have developed custom AI chips and foundation models to keep pace with the industry.

The key difference is how much each company is investing in AI infrastructure. Amazon plans to spend $220 billion on capital expenditures in 2026, a figure that has risen by $20 billion after memory prices jumped. Alphabet is close behind, with a $195‑$205 billion capex target, while Microsoft earmarks $175 billion. Together, the three giants will spend almost $500 billion this year. They have also taken out large loans to fund these builds, a move that would have seemed unthinkable a year ago. If the spending does not deliver returns, even the wealthiest tech firms could face pain. However, early revenue growth suggests the investments are starting to pay off, encouraging further spending.

For investors, the takeaway is that Amazon and Alphabet offer solid AI platforms, custom silicon, and early signs of profitability from their AI bets. Microsoft, while a cloud leader, has made strategic missteps in its AI rollout and is trading at a higher valuation. Choosing the right hyperscaler matters because AI spending is a long‑term gamble. As the technology matures, the companies that have built strong AI foundations and can translate them into revenue will likely outperform the rest.