Meta (META), Microsoft (MSFT), Amazon (AMZN), and Google parent Alphabet (GOOG) are expecting to spend a cumulative $325 billion in capital expenditures and investments in 2025 driven by a continued commitment to building out artificial intelligence infrastructure.
Taken together, this marks a 46% increase from the roughly $223 billion those companies reported spending in 2024.
Tech giants contend all this spending will pay off in the long run. Investors haven’t been so sure of late.
Uncertainty surrounding the timeline for the payoff — along with ongoing debates about whether such high levels of spending are truly justified — has fueled concerns during recent earnings periods.
And the companies’ higher-than-expected investments for the upcoming year come just as investors are scrutinizing Big Tech’s hefty artificial intelligence spending.
Case in point: DeepSeek.
The Chinese startup rattled markets last week after it debuted open-source AI models competitive with OpenAI’s for a fraction of the price. Tech stocks sold off across the board as the model cast doubt on the rationale behind tech giants’ mammoth spending on artificial intelligence infrastructure.
But the DeepSeek surprise didn’t seem to impact tech companies’ big spending plans.
Amazon is by far the biggest spender on capital investments of the group, with its $78 billion for 2024 far eclipsing Microsoft’s $56 billion and Alphabet’s $53 billion.
Looking ahead, Amazon said in a post-earnings call Thursday evening that its spending of $26.3 billion in its most recent quarter is “reasonably representative” of its 2025 investment plans, suggesting investments will total roughly $105 billion this year.
“The vast majority of that capex spend is on AI for AWS [Amazon Web Services, Amazon’s cloud division],” Amazon CEO Andy Jassy said. “AI represents, for sure, the biggest opportunity since cloud and probably the biggest technology shift and opportunity in business since the internet.”
Amazon shares fell just over 4% Friday.
Late last month, Meta confirmed that it would spend $60 billion-$65 billion in 2025, a massive bump from its prior guidance to investors of $38 billion-$40 billion in investment for the year.
CEO Mark Zuckerberg said the company would ultimately spend “hundreds of billions of dollars” to “invest in AI infrastructure over the long term.” That includes investments in building massive data centers, such as the construction of a new facility in Louisiana nearly the size of Manhattan.
Google said on Tuesday that it expects to spend $75 billion this year, about 30% higher than Wall Street expected, per LSEG data. Shares of Alphabet dropped 7% Wednesday following the announcement.
Investors also expressed some wariness toward Microsoft’s spending as its AI services struggle to gain momentum.
The company’s nearly $56 billion in spending during its fiscal year 2024 (ended June 31), fueled by AI — coupled with lower-than-expected revenue linked to artificial intelligence — sent shares tumbling following the results last summer.
Microsoft recently announced its fiscal second quarter results, which showed the tech heavyweight has already spent $42 billion of its expected $80 billion in capital expenditures so far in 2025. The company’s stock fell 6% following these results.
Spend now, worry later
Why are investors skittish? Because the revenue generated directly from the companies’ AI features remains unclear.
When asked about how Meta is monetizing AI, the company’s response was more or less “spend now, worry later.”
Meta CFO Susan Li said in a post-earnings call on Jan. 29, “Our initial focus for Meta AI is really about building a great consumer experience, and that’s frankly where all of our energies are kind of directed to right now.”
“There will, I think, be pretty clear monetization opportunities here over time, including paid recommendations and including a premium offering, but that’s really not where we are focused in terms of the development of Meta AI today,” she added.
Meta shares rose after its earnings report despite that lack of clarity as the company pointed to the rapid uptake of its AI tools for advertisers, which increased to 4 million from 1 million six months ago.
JPMorgan’s Doug Anmuth said “the return on AI investments is more apparent in Meta’s core advertising business” than Google’s.
On its earnings call, Google CFO Anat Ashkenazi said the company’s Cloud segment “is generating billions in annual revenue from AI infrastructure and generative AI solutions” but did not give specifics. Ashkenazi added that demand for Google’s Cloud AI products outpaced capacity. The company declined to respond to Yahoo Finance’s questions about its AI revenue.
Amazon’s Jassy said in regards to the company’s $105 billion in expenses for the year ahead, “Both our business, our customers, and shareholders will be happy, medium to long term, that we’re pursuing the capital opportunity and the business opportunity in AI,” but didn’t get specific about how much AI has or will contribute to revenue.
Meanwhile, Microsoft said in its most recent quarterly earnings report that its total AI business, which includes Azure AI services as well as other Copilot and generative AI offerings, surpassed an annual revenue run rate of $13 billion in the period ended Dec. 31.
Microsoft said that AI contributed 13 percentage points to its growth in Azure revenue, which increased 31% from the prior year. Microsoft AI revenue is partially driven by commitments from OpenAI. OpenAI’s own path to monetization is fuzzy, as the AI startup estimated that it lost $5 billion in 2024 while only generating $3.7 billion in revenue.
Despite investor scrutiny of AI spending, Wall Street analysts remained positive on Big Tech stocks. Raymond James analysts in a Feb. 3 report wrote that while “monetization questions linger,” there is “evidence building towards [companies] closing the gap.”
Morgan Stanley analysts said the growing expenditures from tech firms are “bolstering the bull case for AI/cloud capex stocks.”
According to BofA Securities analyst Wamsi Mohan, Apple could move device assembly to factories in other countries, something the company has been doing since COVID exposed weakness in its supply chain.
If Apple builds 80% of its devices outside of China, it would only see a $0.05 earnings per share impact this fiscal year. If 50% are sourced from outside of China that could rise to between $0.07 and $0.12 per share.
China’s antitrust crackdown would similarly put a dent in Apple’s earnings, but it wouldn’t be a wipeout, Wedbush’s Dan Ives explained in an investor note.
The company pulled in $26 billion in Services revenue, which includes App Store sales, in Q1 and $124 billion in overall sales for the quarter. According to Ives, Apple generates $5 billion a year via its Chinese App Store, which is a relatively thin slice of the company’s overall pie.
“It’s less about revenue exposure for investors and more about building US/China tensions with US Big Tech in line for retaliatory shots across the bow,” Ives wrote in his memo.
Intel, Google, and Nvidia
Intel, Google, and Nvidia are also facing potential antitrust investigations as part of China’s response to US tariffs, and it could mean trouble for Intel in particular.
The chipmaker generates the bulk of its revenue through sales in China. In 2024, China accounted for $15.5 billion of the company’s $53.1 billion in revenue. The US, Intel’s second-largest region, made up $12.9 billion.
Intel is in the midst of a multiyear turnaround effort, putting the company in a particularly precarious situation if China decides to take some kind of action against the company.
Google, for its part, does very little business in China. After pulling its operations from the company years ago, the only real presence the company has is selling ads for Chinese businesses looking to reach foreign customers.
“It’s almost comical that China is considering regulating Google — since Google is effectively banned there,” Deepwater Asset Management managing partner Gene Munster wrote in a research note.
Things are a bit shakier for Nvidia. The company is under pressure from both China and the US after China launched a probe into the company in December following then-President Biden’s move to restrict exports of certain Nvidia chips to the country. And after the debut of DeepSeek’s AI models, which the company developed using underpowered Nvidia chips, the US is considering tightening those export restrictions even further.
China accounted for $5.4 billion of Nvidia’s $35 billion in revenue in Q3, well behind the US’s $14.8 billion in sales. But as one of the AI industry’s largest markets, China is an important piece of the company’s overall strategy.
It’s not entirely clear what an antitrust probe would mean for Nvidia in China, but if the US forces the company to restrict more chips than it already does, it could face a revenue headwind out of the region.
For now, Big Tech has to contend with the US’s tariffs. But with China signaling it’s willing to put a hurting on Silicon Valley companies if Trump pushes things further, firms won’t be able to rest comfortably for some time.
