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Massive AI spending shows early payoff for Big Tech

3 1
05.08.2025
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Technology

Technology

 

The Big Story

Massive AI spending shows early payoff for Big Tech

The billions of dollars Big Tech has poured into artificial intelligence (AI) development seem to be paying off as companies show they can produce results, earning Wall Street’s stamp of approval for now.

© Kin Cheung, Associated Press

After months of questions about whether major tech firms were overshooting AI spending, Google, Microsoft and Meta are taking a victory lap after outperforming investors’ lofty expectations.

“It’s showing it’s starting to pay off and companies are doubling down,” Wedbush Securities analyst Dan Ives said, adding, “It puts fuel in the engine for tech to rally more in the second half [of the year].”

Major tech firms promised eye-popping investments in AI heading into 2025, as they pushed to build out the data center infrastructure that is expected to underpin the development of frontier AI models — a frenzy reinforced by President Trump’s own AI infrastructure push.

These investments, already under scrutiny because of their sheer size, faced additional pressure earlier this year with the emergence of DeepSeek.

The Chinese AI startup released its R1 model, which it claimed could compete with top American AI models and was developed with a fraction of the infrastructure.

However, the tech giants seem to have quieted critics so far with the results of their spending.

Google kicked off a series of strong tech earnings last week, beating investor expectations with $96 billion in revenue and $28 billion in net income last quarter.

The search giant, which initially planned to invest $75 billion in capital spending this year, also upped the ante with an additional $10 billion investment.

This raised the bar for Microsoft and Meta........

© The Hill