Meta, Google, and Microsoft Triple Down on AI Spending
Three of the biggest US tech giants – Microsoft, Meta and Google – sent investors a blunt message when they reported quarterly earnings on Wednesday: lavish spending on AI infrastructure has only just begun.
Meta said its capital spending this year would be between $70 billion and $72 billion, up from its previous lower forecast of $66 billion to $72 billion. Next year, Meta's chief financial officer Susan Li said she expected the company's expenses to be “significantly larger.” The social media giant's increasing investment matches its increasing revenue: Meta reported to collect $51.24 billion last quarter, up 26 percent year-over-year.
CEO Mark Zuckerberg said the company would continue to pour money into infrastructure to meet growing demand for AI and prepare for potential major breakthroughs in the technology. “There's a variety of timelines for when people think we're going to get superintelligence,” Zuckerberg said on a conference call with analysts. “I think it is the right strategy to aggressively load construction capacity, so that in this way we are prepared for the most optimistic cases.”
Meta has moved aggressively towards recruit AI talent in recent months, offering some researchers compensation packages worth hundreds of millions of dollars. The company also cut about 600 jobs last week in what it said was an effort to make its AI teams more efficient. Meta has reorganized its AI teams several times over the past eight months.
Meta assured investors that its AI investments are already reaping rewards for the company, but did not share many specifics. Meta did say that AI benefited the company's advertising business and virtual reality product lines, predicting that it would drive those divisions to new heights in the future.
Google's parent company, Alphabet, said it expected its capital expenditures to be between $91 billion and $93 billion in 2025. Earlier this year, Alphabet estimated that this number would be only $75 billion. As with Meta, the increase in expenses was matched by an increase in income. The tech giant said it earned a record $102.3 billion in the third quarter, up 33 percent from a year ago.
The bulk of Alphabet's spending will likely be allocated to data centers and other artificial intelligence initiatives. Google said it earned $15.15 billion from its cloud business in the third quarter, a 35 percent increase from the same period in 2024. Gemini, Google's general purpose AI appnow has 650 million monthly active users, up from 450 million last quarter. (By comparison, OpenAI CEO Sam Altman recently said that ChatGPT has 800 million weekly users.)
Microsoft reported revenue of $77 billion for the quarter ending September 30, up 18 percent from a year ago. The cloud company's revenue was up 26 percent year-over-year. Capital spending was $34.9 billion this quarter, with much of the investment going to AI infrastructure. That figure is nearly $5 billion more than previously predicted, and a 74 percent jump from the same quarter a year ago.
