Big Tech keeps churning out AI. The pressure boiled to show why

Silicon Valley’s Mega Ai spending spree isn’t slowing down anytime soon. But Wall Street’s patience to see a comeback is wearing thin.

That message rang clear when meta, Microsoft, Amazon, Apple and Google Parent Alphabet All said this week that they are consuming more money, such as renting infrastructure.

Based on the way the analysts built analysts from companies like meta, alphabet and Google about the calls they received this week, they are eager for signs of big investment.

Microsoft, Alphabet, Amazon and Meta all grew their net income for the year and exceeded Wall Street’s expectations. Microsoft and Google saw their cloud businesses expand by 40% and 34% respectively, while sales of Amazon Web services grew by 20% year-on-year – a sign that companies are becoming more dependent on their AI services.

And they continue to pour tens of billions of dollars into AI infrastructure and data centers, investments they call necessary for the next story of the Internet.

The dollar amounts involved are staggering.

Google expects to spend $91 to $93 billion in capital spending by 2025, up from $85 billion It Rececast. Microsoft sees that spending 74%, to $ 34.9 billion this year, is much lower than the $ 30 billion predicted for the quarter. Meta spent $19.37 billion, up from $9.2 billion last year and above the $18.4 billion analysts expected.

And Amazon estimates that 2025 revenue will hit $125 billion — and expects to increase that by 2026.

Even Apple, which is not a major cloud provider, expects to increase the use of cash flow related to AI investments, said Apple’s chief financial officer Kevan Parekh.

Existing data centers need to be upgraded to handle AI workloads, which has led to massive acquisitions, said Melissa Otto, head of research at S&P’s global research service Alpha.

Tech Giants justify that use by saying that demand is distributed. Amazon CEO Andy Jassy said that “as fast as we can add power right now, we like it.”

But Wall Street wanted more than just permission for future returns. Shares of Meta fell as much as 13.5% on Thursday, while Microsoft was down more than 3%.

Almost all questions about Meta’s earnings focus on how the company views its AI investments translate into revenue, the timeline for new products and models from the SuperIntelligence Lab and its general approach to AI.

Zuckerberg called AI useful to power virtual assistants and help marketers plan their campaigns. More than 1 billion people use Meta AI every month, he said, adding that AI could lead to “all kinds of new products around different content formats.”

“We expect to create novel models and novel products, and I’m very happy to have many collaborations where we have,” he said of the Superintelligence Lab’s efforts.

In the Microsoft Call, analysts want to know whether clients will make good on the promised purchase obligations and whether the technology industry can really make money from global investments. Amy Hood, Microsoft’s Chief Financial Officer, said that its investment shows that the business is already booked, saying that demand is increasing.

Google investors want to know how AI insights and agents are changing how the company monetizes search. The company’s chief business officer said the company makes the same amount of money from ads below and within AI responses as traditional search.

The answers satisfied some commentators; Ubs said it maintains its “confidence that AI-related stocks should continue to perform at a steady pace,” while Cfra Research said it comes from a quarter that is “optimistic” that it remains committed to being a leading AI lab. Wedbush Security’s Dan Ivel said that Microsoft is “hitting its next phase of investment on the AI ​​front.”

But that was just a long time ago as they continued to grow the products that made them the biggest technology companies in the world. Investors are likely to raise their eyebrows at all of this spending if customers start pushing through Meta Media Media’s apps or Google’s search engine, according to OTTO.

“You see the pressure to innovate,” junior Evan Schlossman said. “You have a new space in AI that people believe is very important, so there’s a rush to fill it.”

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