Silicon Valley’s biggest players are spending record sums on artificial intelligence as they compete to lead an industry that is reshaping global technology and pushing stock markets to new highs.
Earnings updates from Meta, Alphabet, and Microsoft this week showed how the world’s top tech firms are ramping up investment in AI infrastructure, chips, and talent. Each company pledged tens of billions of dollars in new spending as they seek to secure long-term dominance in the rapidly growing sector.
Meta said it expected capital expenditure in 2025 to reach between $70bn (£53bn) and $72bn, higher than its previous guidance. The company also signalled that spending would grow “notably larger” in 2026, as it races to compete with rivals such as OpenAI.
Chief executive Mark Zuckerberg defended the scale of the investment, saying the company’s future depended on AI innovation.
“The right thing to do is accelerate this,” he told analysts. “We are operating the family of apps and ads business in a compute-starved state at this point.”
Alphabet and Microsoft boost AI budgets
Google’s parent company Alphabet also raised its capital spending forecast to between $91bn and $93bn, up from its earlier outlook of $85bn. The figure is nearly double the company’s 2024 investment levels and highlights the vast sums being poured into expanding its global data centre network.
Meanwhile, Microsoft reported quarterly capital expenditure of $34.9bn through the end of September — far higher than expected and up from $24bn the previous quarter.
Chief executive Satya Nadella said the company was “increasing investments in AI across both capital and talent to meet the massive opportunity ahead.” He pointed to the growing success of Azure, Microsoft’s cloud business, and its suite of AI-powered products as evidence of “real-world impact.”
Investor enthusiasm, but questions remain
AI optimism has helped all three firms outperform the wider S&P 500 index this year, with investors betting on artificial intelligence as the next major driver of economic growth.
However, analysts have warned that it could take years for such vast investments to deliver meaningful financial returns.
Economist Aditya Bhave of Bank of America said AI spending has become one of the key forces sustaining the US economy.
“The two things holding up the US economy in recent months have been consumers and AI-related business investment,” he said. “If the latter remains strong, it’s a bullish signal for GDP growth.”
Despite the mixed picture, the three companies all reported solid quarterly earnings. Meta’s profits fell 83% to $2.7bn due to a one-off tax charge, while Microsoft’s rose 12% to $27.7bn and Alphabet’s jumped 33% to roughly $35bn.
The figures underline how deeply AI is now embedded in Big Tech’s strategy — and how fierce the race has become to control its future.
