Meta (META), Microsoft (MSFT), and Google parent Alphabet (GOOG) are expecting a cumulative $228 billion in capital expenditures in 2025, driven by their investments in artificial intelligence infrastructure. That’s a 55% increase from the roughly $150 billion those companies reported spending in 2024.
Tech giants contend all this spending will pay off in the long run. Investors aren’t so sure. Uncertainty surrounding the timeline for the payoff — along with ongoing debates about whether such high levels of spending are truly justified — continues to fuel concerns with each earnings cycle.
The companies’ higher-than-expected capital expenditures 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 as 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.
The DeepSeek surprise didn’t seem to impact tech companies’ big spending plans.
Meta confirmed last week that it will spend $60 billion to $65 billion in 2025, a massive bump from its prior guidance to investors of $38 billion to $40 billion for the year. CEO Mark Zuckerberg said the company will 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, well, Manhattan.
Google reported 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 have been wary of Microsoft’s spending as its AI services struggle to gain momentum.
The company’s nearly $56 billion in spending during its fiscal year 2024 (for the year 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.
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.”
