Global technology powerhouses are pouring unprecedented sums into artificial intelligence, betting big on the sector’s explosive growth even as analysts question how quickly these investments will pay off. Fresh earnings reports from Meta, Alphabet and Microsoft have revealed a rapid acceleration in capital expenditures, fuelled by the race to dominate everything from data centres and semiconductors to cutting-edge AI models.
Meta announced that its annual capital spending for 2025 will reach between $70bn and $72bn, raising the lower end of its earlier projection. The social media firm also signalled that 2026 will bring “notably larger” investments as it works to challenge AI rivals such as OpenAI. Chief executive Mark Zuckerberg defended the spending spree during a call with analysts, insisting that the firm’s ambitions in generative AI and advertising technology require faster scaling. He argued that Meta has been “compute-starved” for years and now needs to accelerate investments to support both future products and existing ad-driven business models. “The right thing to do is accelerate this,” he said.
Alphabet – parent company of Google and YouTube – also lifted its capital expenditure forecast for the current year to between $91bn and $93bn. The figure marks a dramatic jump from the roughly $85bn projected earlier in the year, underscoring the company’s determination to expand its AI capacity across cloud, model development and infrastructure. The revised estimate is close to double the company’s spending in 2024, highlighting just how aggressively Silicon Valley is positioning itself for the next AI leap.
Microsoft, meanwhile, reported that it spent $34.9bn on capital expenditures in the quarter ending 30 September, up sharply from $24bn in the previous quarter and above what analysts had expected. Chief executive Satya Nadella said the firm was ramping up investment in both AI talent and physical infrastructure to serve “the massive opportunity ahead”. He highlighted Azure and Microsoft’s AI-powered products as examples of tools already making a “real-world impact” for customers across industries.
Soaring AI-related spending has helped all three firms outperform the broader S&P 500 this year, as investors continue to bet on the long-term financial gains the technology could unlock. But Wall Street is also watching closely to see whether these multi-billion-dollar investments start delivering visible profits and measurable economic benefits.
Economists say the tech sector’s deep dive into AI has become one of the key engines propping up the US economy. Aditya Bhave, senior US economist at Bank of America, noted that consumer spending and AI-linked corporate investment have been the primary drivers of growth in recent months. “To the extent that the latter remains strong, it’s a bullish signal for GDP growth,” he said.
Despite the optimism, quarterly results offered a mixed picture. Meta posted higher revenue for the quarter, but its profits plunged 83% to $2.7bn because of a one-time tax charge. In contrast, Microsoft reported a 12% rise in quarterly profits, reaching $27.7bn, while Alphabet’s profits surged 33% to around $35bn. Even with uneven earnings, the technology giants appear united in one strategy: spend heavily now to secure command of AI later.
