Major technology companies are increasing their investment in artificial intelligence as they seek to capitalise on a surge in demand that has driven stock markets higher.
Financial results released by Meta, Alphabet and Microsoft show large increases in spending on data centres, specialised chips and related infrastructure, even as questions remain over how quickly these investments will translate into profits.
Meta said it expects capital expenditure in 2025 to range between $70bn and $72bn, up from an earlier forecast of $66bn to $72bn. The company also signalled that spending in 2026 will rise “notably” as it expands efforts to compete with AI developers like OpenAI.
Chief executive Mark Zuckerberg said the investment was necessary to support new AI products and improve its current advertising and content systems. “The right thing to do is accelerate this,” he told analysts, saying Meta’s existing systems were limited by computing capacity.
Alphabet, the parent company of Google and YouTube, also raised its spending outlook for the year to between $91bn and $93bn, significantly higher than the $85bn estimate it provided in mid-year guidance. That figure is nearly double its capital expenditure in 2024.
Microsoft reported capital spending of $34.9bn for the quarter ending 30 September, up from $24bn in the previous quarter and above market expectations. Chief executive Satya Nadella said the company was continuing to invest in both infrastructure and skilled talent to support demand for cloud-based AI tools.
Investor enthusiasm for AI has helped all three companies outperform the wider S&P 500 index. However, analysts are now closely watching whether the increased investment will result in stronger financial returns.
Meta reported higher quarterly revenue but posted an 83% drop in profit to $2.7bn due to a one-off tax expense. Microsoft’s quarterly profit rose 12% to $27.7bn, while Alphabet reported a 33% increase in profit to about $35bn.
Bank of America senior US economist Aditya Bhave said consumer spending and business investment in AI have been key supports for the US economy in recent months. “If AI investment remains strong, it is a positive signal for growth,” he said.
