Major technology firms are significantly increasing their capital expenditure, primarily to bolster their AI infrastructure. Alphabet, Microsoft, Amazon, and Meta are projected to collectively spend nearly $400 billion this year. This level of investment surpasses the European Union's defence spending.
Analysts predict continuous spending increases, with Morgan Stanley estimating $2.9 trillion will be invested in chips, servers and data centres between 2025 and 2028. These investments are expected to boost company profits and drive share prices. Microsoft and Meta have seen their market capitalisations rise significantly, while Nvidia's shares have also surged.
This surge in AI spending is largely focused on building robust infrastructure, including data centres and acquiring AI chips. Platforms like Azure, AWS, and Meta are being upgraded to enhance AI scalability. While Wall Street welcomes this spending, questions remain about whether all companies, particularly those consumer-focused, will successfully convert these investments into sustainable profits.
