Major technology companies around the globe are significantly raising their capital expenditure budgets amid fierce competition for leadership in artificial intelligence. It is forecasted that firms like Microsoft, Amazon, Alphabet, and Meta will collectively spend over $344 billion by 2025, primarily on developing data centers for AI model operations, according to Japan Times.
Microsoft, which spent a record-breaking $24.2 billion last quarter, plans to increase its capital expenditures to $30 billion, focusing on enhancing cloud services and AI infrastructure. The company has already recorded a 39% increase in Azure sales, surpassing analysts' expectations. CEO Satya Nadella emphasized that Microsoft is "leading the wave of AI infrastructure." Notably, the company recently joined the "$4 trillion club," surpassing both Apple and NVIDIA.
Amazon spent $31.4 billion in the last quarter—almost double what it did a year ago. However, investors were left disappointed: the cloud division showed weak growth, leading to 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 owner of Google, raised its capital expenditure forecast by $10 billion to $85 billion and plans even larger investments in 2026. CEO Sundar Pichai stressed that the investments are necessary to meet the growing demand for cloud services.
Meta Platforms raised the lower limit of its expenditure forecast for 2025 and plans to accelerate its spending further. The company is constructing large data centers and attracting leading AI researchers. Recently, it established a division called Superintelligence to develop human-level AI. Strong advertising sales and an optimistic revenue forecast allowed Meta's stock to rise by over 8%, indicating that investments in AI are beginning to pay off.
In contrast, Apple appears modest: its capital expenditures over the nine months leading up to June 28 reached $9.47 billion, a 45% increase from the previous year, a significant portion of which is also directed toward AI. CFO Kevan Parekh anticipates "significant but not exponential growth" in expenditures in the future.
Analysts note that for Big Tech, the current strategy is a race for the AI market. As a Forrester expert remarked, Google and other companies are simply compelled to spend colossal sums to keep pace with OpenAI and competitors.
