Amazon, Google, Microsoft and Meta are increasing their AI-related capital expenditures.
Amazon, Microsoft, Google, and Meta show that the speed of AI investment is not over.
Their total capital expenditures have been reported to be 2025 despite investors questioning whether spending is justified after the launch of a seemingly efficient model from China’s deepshake. It is set to exceed $320 billion a year.
The $246 billion increase the four companies spent in 2024 will be significantly increased to compete to build data centers, acquire AI chips, expand cloud computing capabilities, and boost large-scale language models and enterprise AI tools. is increasing to.
Stocks in Google and Microsoft have declined after earnings reporting, reflecting whether investor anxiety will lead to large-scale AI infrastructure spending.
Tech executives respond with messages similar to those concerns. Cheap AI leads to higher demand for AI products.
Amazon is leading CAPEX fees and plans to allocate capital expenditures of more than $100 billion this year, starting from $77 billion in 2024.
CEO Andy Jassy defended spending during the company’s revenue call on Thursday, pointing out a “significant signal of demand” for AI-powered services.
“If AWS is expanding CAPEX, especially for once-in-a-lifetime business opportunities like AI, it’s actually a very good sign and I think it’s medium to long term for AWS business. ” says Jassy.
CFO Brian Olsavsky repeated this sentiment, saying that Amazon is not worried that Deepseek will undermine AI bets.
“Customers continue to spend on technology,” Orsavsky said.
Despite optimism, Amazon’s stock fell more than 5% after the company announced its spending plans.
Meta’s AI spending is also increasing.
Meta expects capital expenditures of between $60 billion and $65 billion this year, starting from $39 billion in 2024. CEO Mark Zuckerberg last month told investors that AI would be central to the company’s revenue growth strategy.
He said the company is “actively investing in initiatives that use these advances to drive revenue growth.”
Meta is also promoting the establishment of the “American Standard” of open source AI models. This is a move that can distinguish that approach from its rivals.
Meta’s AI investments are being received more aggressively by investors, with stocks rising following revenue calls. Analysts attribute this to their ability to monetize AI through ad targeting, demonstrating real-time investment returns.
Google’s parent company, Alphabet, has doubled AI and plans to spend around $75 billion in capital expenditures in 2025.
But despite an ambitious AI push, Google’s stock fell more than 8% after earnings on Tuesday.
CEO Sundar Pichai defended spending and pointed out the need to build infrastructure for Google’s leadership in AI and the application of the future.
“The company is in a big rhythm and cadence. We will build, test and launch products faster than ever,” Pichai said in a revenue call on Tuesday. “This leads to product use, revenue growth and results.”
However, some analysts worry that Google’s AI products, like the Gemini chatbot, have yet to prove their ability to generate meaningful revenue.
Microsoft is set to spend $80 billion on AI-related infrastructure in 2025, establishing itself as a leading player in AI cloud racing.
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CEO Satya Nadella emphasized that demand for AI services exceeds expectations.
“Already, our AI business has surpassed the annual revenue occupancy rate of $13 billion, an increase of 175% year-on-year,” Nadella said in a revenue release.
Last month, Nadella mentioned Jevons Paradox. This is the idea that demand will increase as the cost of using resources decreases.
“When AI becomes more efficient and accessible, its use will skyrocket and turn it into a sufficient product,” Nadella said in a post on X.
However, despite the increased revenues of AI, Microsoft’s stocks continued to soak after the profits. Some analysts argue that Microsoft is off to a head start thanks to the Openai partnership, but has yet to convert AI hype into sustained, long-term revenue.
AI spending gambling?
Not everyone is buying Big Tech AI spending.
Some investors worry that the competition to dominate AI will turn into expensive gambling. Especially when it turns out that a cheaper way to train and run models is to over-expenditures for CAPEX.
“Investors are demanding a clearer timeline on when AI spending is converted not only to promises, but also to revenue and sales growth,” said Jesse Cohen, senior analyst at Investing.com. It’s there.
Others, like Dan Ives, managing director of Wedbush Securities, do not view Deepseek as a threat to major technology Capex spending.
“A huge week for massive technology revenue as Zuckerberg, Nadella, Cook and Musk double the vision of AI and what this means for the stubborn tech of each tech that looks ahead. “He said in a post last month on X. “This is an AI weapons race, and AI Deepseek’s Temu hasn’t changed that… the AI revolution is just beginning.”
