Tech Giants Pour Billions Into AI Race as Spending Hits Record Levels
Global technology leaders Meta, Alphabet, and Microsoft are ramping up spending on artificial intelligence (AI) as competition intensifies to dominate the rapidly expanding sector. The massive investments, revealed in fresh earnings reports on Wednesday, highlight the growing financial stakes in an AI boom that has fuelled record stock market valuations.
Meta announced plans to boost its 2025 capital expenditures to between $70 billion and $72 billion, up from earlier projections of $66 billion to $72 billion. The company also signalled that its 2026 spending would be “notably larger,” as it continues to build infrastructure to compete with firms like OpenAI.
Meta CEO Mark Zuckerberg defended the surge in spending during a call with analysts, describing it as essential to driving future growth. “The right thing to do is accelerate this,” he said, noting that the company’s apps and ad systems are currently “compute-starved.”
Alphabet, the parent company of Google and YouTube, also raised its capital expenditure forecast for the year to $91 billion–$93 billion, up from its earlier range of $85 billion. That figure is nearly double what the firm spent in 2024, underlining its commitment to expanding AI capabilities and data infrastructure.
Meanwhile, Microsoft reported a significant increase in its capital spending to $34.9 billion for the quarter ending September 30, up from $24 billion in the previous quarter. CEO Satya Nadella said the company is “increasing investments in AI across both capital and talent to meet the massive opportunity ahead,” pointing to Azure and other AI products as key drivers of growth.
Investor enthusiasm for AI-driven innovation has pushed all three tech giants’ shares higher, helping them outperform the broader S&P 500 index. Yet, analysts continue to question when these massive expenditures will begin yielding measurable financial returns.
Despite the uncertainty, AI investment remains one of the key pillars propping up the U.S. economy. Aditya Bhave, senior U.S. economist at Bank of America, noted that “the two things holding up the economy in recent months have been consumers and AI-related business investments.”
In their latest earnings results, Meta reported a revenue increase but an 83% drop in profits to $2.7 billion, due to a one-time tax charge. Microsoft’s profits climbed 12% to $27.7 billion, while Alphabet saw a 33% rise, reaching about $35 billion.
As the AI race heats up, the world’s biggest tech firms appear undeterred by short-term costs — betting instead on artificial intelligence as the foundation for the next wave of technological transformation.
