Major technology firms around the globe are significantly boosting their capital expenditures in a bid for dominance in the artificial intelligence arena. Projections indicate that Microsoft, Amazon, Alphabet, and Meta will collectively spend over $344 billion by 2025, primarily on building data centers for AI implementations, according to Japan Times.
Microsoft, which spent a record $24.2 billion last quarter, plans to raise its capital expenditures to $30 billion, linking this increase to the expansion of cloud services and AI infrastructure. The company has reported a 39% surge in Azure sales, surpassing analysts' expectations. CEO Satya Nadella emphasized that Microsoft is "leading the charge in AI infrastructure." Moreover, the company recently joined the "$4 trillion club", surpassing Apple and NVIDIA.
Amazon spent $31.4 billion in the last quarter—almost double the amount from a year ago. However, investors were disappointed as the cloud division showed weak growth, resulting in an 8.1% drop in the company's stock. Analysts predict that Amazon Web Services' margins will remain under pressure at least until 2026.
Alphabet, the parent company of Google, revised its capital expenditure forecast up by $10 billion—to $85 billion, with plans for even larger investments in 2026. CEO Sundar Pichai highlighted that these investments are essential to meet the growing demand for cloud services.
Meta Platforms has raised its lower limit for projected expenditures for 2025 and plans to ramp up spending even faster. The company is constructing large data centers and attracting leading AI researchers. Recently, it established a new division, Superintelligence, aimed at developing human-level AI. Strong advertising sales and an optimistic revenue forecast have led Meta's stock to rise by more than 8%, indicating that AI investments are starting to pay off.
In contrast, Apple appears modest: its capital expenditures for the nine months ending June 28 amounted to $9.47 billion, a 45% increase from last year, with a significant portion also directed towards AI. CFO Keval Parekh expects "substantial but not exponential growth" in spending going forward.
Analysts note that for Big Tech, the current strategy is a competition for the AI market. As noted by Forrester expert, Google and other companies are simply compelled to spend enormous sums to keep pace with OpenAI and competitors.
