Three of the world’s most powerful tech companies—Microsoft, Meta, and Google—delivered a unified and staggering message to investors this week: their unprecedented spending spree on artificial intelligence is not slowing down, it’s accelerating dramatically.
Alongside reporting soaring quarterly revenues, the tech giants significantly raised their capital expenditure forecasts, signaling a collective, high-stakes bet that the future of technology will be won by whoever can build the biggest and most powerful AI infrastructure.
The AI arms race: a multi-billion dollar escalation
The updated spending plans are colossal.
Meta announced its capital expenditure for the year would climb to between $70 billion and $72 billion, up from a previous forecast. Meta’s chief financial officer Susan Li warned that spending would be “notably larger” next year.
Google’s parent company, Alphabet, echoed the same sentiment, raising its expected 2025 capital expenditures to a range of $91 billion to $93 billion, a significant increase from its earlier $75 billion estimate.
Microsoft, for its part, reported capital expenditures of $34.9 billion for its most recent quarter alone—a 74% jump from the same period last year and nearly $5 billion more than forecasted.
Looking ahead, Microsoft’s Chief Financial Officer Amy Hood stated that the company’s total spend will “increase sequentially, and we now expect the fiscal year 2026 growth rate to be higher than fiscal year 2025.”
Building for breakthroughs
The spending surge is being fueled by record-breaking revenues. Meta raked in $51.24 billion last quarter (up 26%), while Alphabet earned a record $102.3 billion (up 33%).
The companies argue this massive reinvestment is essential to prepare for the next technological leap.
CEO Mark Zuckerberg told analysts that Meta’s strategy is to get ahead of what could be a rapid arrival of advanced AI. “There’s a range of timelines for when people think that we’re going to get superintelligence,” Zuckerberg said.
I think that it’s the right strategy to aggressively front-load building capacity, so that way we’re prepared for the most optimistic cases.
This strategy involves more than just hardware. Meta has been aggressively recruiting top AI talent with massive compensation packages while also cutting some 600 jobs last week in an effort to make its AI teams “more efficient.”
A ticking time bomb?
While Big Tech projects confidence, some analysts are raising alarms about a potential AI bubble, fueled by staggering, multi-year investment announcements.
Last month, Nvidia floated a conditional investment of “up to $100 billion” in OpenAI, while OpenAI itself is reportedly planning to develop computing resources worth an astonishing $1.4 trillion.
The risks are not merely theoretical. Microsoft, which has committed $13 billion to OpenAI, took a $3.1 billion hit to its net income this quarter from losses on that investment.
The company acknowledged that the partnership will result in “increased volatility” and said it will exclude any impacts from its OpenAI investment in future financial outlooks.
Microsoft’s strategy for a volatile future
Despite the risks, the tech giants are not spending blindly. Microsoft CEO Satya Nadella explained to analysts that the company is mitigating its risk by building flexible, or “fungible,” data centers that can be adapted to changing demands.
He also stressed that the investment is a continuous process of modernization, not a single, one-off purchase.
“It’s not like we buy one version of Nvidia and load up for all the gigawatts we have. Each year, you buy, you ride Moore’s Law, you continually modernize and depreciate it, and you use software to grow efficiency,” Nadella said.
This approach provides a degree of protection, according to Mark Moerdler, a senior research analyst at Bernstein, who noted that Microsoft is “building capacity in tranches over time and can shift resources.”
But he acknowledged the larger question remains unanswered. “Is there an overall AI bubble? It’s possible, and that they did not answer.”
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