Meta, Google, and Microsoft Triple Down on AI Spending

TL;DR: Three of America’s largest tech companies reported record quarterly profits on 29 October alongside unprecedented AI infrastructure spending commitments. Meta increased its 2025 capital expenditure forecast to $70-72 billion, Google’s parent Alphabet projected $91-93 billion, and Microsoft reported $34.9 billion for a single quarter—a 74% year-over-year increase. Whilst revenue growth matched these investments, analysts are raising concerns about a potential AI market bubble.

Record Spending, Record Revenues

Meta’s quarterly earnings revealed $51.24 billion in revenue, up 26% year-over-year, alongside increased infrastructure spending forecasts. CEO Mark Zuckerberg justified the aggressive investment strategy by citing preparation for potential breakthroughs in artificial intelligence, including the possibility of achieving superintelligence.

“There’s a range of timelines for when people think that we’re going to get superintelligence,” Zuckerberg stated during an analyst call. “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.”

Google reported record quarterly revenue of $102.3 billion (up 33% year-over-year), with its Gemini AI application now reaching 650 million monthly active users—up from 450 million the previous quarter. Microsoft’s cloud business revenue increased 26% year-over-year, contributing to total revenues of $77 billion.

Infrastructure Investment Scale

The scale of investment reveals the industry’s confidence in continued AI demand:

  • Meta: $70-72 billion capital expenditure for 2025, with CFO Susan Li indicating “notably larger” spending for 2026
  • Alphabet: $91-93 billion projected expenditure, increased from an earlier $75 billion estimate
  • Microsoft: $34.9 billion in a single quarter, nearly $5 billion above previous forecasts

Most spending targets data centres and AI infrastructure. Microsoft CFO Amy Hood confirmed that total spending will “increase sequentially” with fiscal year 2026 growth rates exceeding 2025.

OpenAI Partnership Impacts

Microsoft disclosed a $3.1 billion net income reduction this quarter due to losses from its $13 billion investment in OpenAI. The company stated that ongoing partnership volatility will be excluded from future financial outlooks.

CEO Satya Nadella emphasised the company’s strategy of creating “fungible” data centres that can adapt to changing customer demands, whilst continually modernising infrastructure to leverage improvements in chip technology.

Market Sustainability Questions

Despite robust revenue growth, some analysts question whether AI demand justifies these investment levels. Recent announcements of multi-year, multi-billion-dollar data centre projects have intensified concerns about a potential market bubble.

OpenAI recently announced plans for 30 gigawatts of computing resources valued at $1.4 trillion, whilst Nvidia committed “up to $100 billion” in OpenAI investment contingent on specific data centre deployment milestones.

Mark Moerdler, senior research analyst at Bernstein, noted that whilst Microsoft’s incremental infrastructure modernisation strategy provides “a lot of protection,” the broader question remains: “Is there an overall AI bubble? It’s possible, and that they did not answer.”

Strategic Context for UK Businesses

These investment patterns suggest several implications for UK organisations:

  1. Sustained AI Tool Availability: Major providers will continue expanding AI infrastructure capacity, supporting increased enterprise adoption
  2. Price Competition Pressure: As infrastructure scales, competitive pricing for AI services may emerge
  3. Partnership Stability Concerns: The OpenAI-Microsoft relationship volatility indicates that enterprise AI strategies should avoid single-vendor dependencies

The three companies’ willingness to accept short-term losses whilst expanding infrastructure suggests strong conviction in long-term AI market growth. However, UK businesses should monitor whether actual enterprise adoption matches infrastructure expansion, particularly as economic uncertainty affects technology budgets.

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