Big Tech keeps splurging on AI. The pressure is ramping up to show why

By Lisa Eadicicco, CNN

(CNN) — Silicon Valley’s mega AI spending spree isn’t slowing down anytime soon. But Wall Street’s patience to see a return might be wearing a little thin.

That message rang clear when Meta, Microsoft, Amazon, Apple and Google parent Alphabet all said this week that they’re forking over more on capital expenditures, like leases and equipment for data centers and infrastructure.

Based on the way analysts grilled executives from companies like Meta, Alphabet and Google on earnings calls this week, they’re eager for signs that these massive investments will pay off in a big way.

AI spending continues to soar

Microsoft, Alphabet, Amazon and Meta all grew their overall revenue year-over-year and surpassed Wall Street’s expectations. Microsoft and Google saw their cloud businesses expand by 40% and 34% respectively, while Amazon Web Services sales grew 20% year-over-year – a sign that companies are indeed relying on their services in the age of AI.

And they’re continuing to pour tens of billions of dollars into AI infrastructure and data centers, an investment they call necessary for the internet’s next era.

The dollar amounts involved are staggering.

Google expects to spend $91 to $93 billion in capital expenditures for 2025, up from the $85 billion it previously forecast. Microsoft sees that spending up 74%, to $34.9 billion this year, largely lining up with the more than $30 billion it predicted for the quarter. Meta spent $19.37 billion, up from $9.2 billion a year ago and more than the $18.4 billion analysts expected.

And Amazon estimates the 2025 bill will hit $125 billion – and expects to increase that in 2026.

Even Apple, which is not a major cloud provider, expects to increase its capital expenditure spending related to AI investments, Apple Chief Financial Officer Kevan Parekh said on the company’s Thursday earnings call.

Existing data centers need to be upgraded to handle AI workloads, leading to the giant outlays, said Melissa Otto, head of research for investment research service S&P Global Visible Alpha.

Tech giants justify that spending by saying demand is outstripping supply. Amazon CEO Andy Jassy said that “as fast as we’re adding capacity right now, we’re monetizing it.”

Wall Street wants big answers from Big Tech

But Wall Street wants more than just promises of future returns. Meta shares fell as much as 13.5% on Thursday, while Microsoft’s were down more than 3%.

Nearly every question on Meta’s earnings call focused on how the company views its AI investments translating into income, the timeline for new products and models coming out of its Superintelligence Lab and its general approach to AI.

Zuckerberg called AI useful for powering virtual assistants and helping advertisers plan their campaigns. More than a billion people use Meta AI on a monthly basis, he said, adding that AI can lead to “all kinds of new products around different content formats.”

“We expect to build novel models and novel products, and I’m excited to share more when we have it,” he said about the Superintelligence Lab’s efforts.

On the Microsoft call, analysts wanted to know if clients will make good on promised purchasing commitments and whether the tech industry can really make money from global AI investments. Amy Hood, Microsoft’s chief financial officer, said its investments reflect business that’s already been booked, saying that demand is increasing.

Google investors wanted to know how AI summaries and agents are changing how the company makes money from search. Google’s chief business officer said the company makes about the same money from ads below and within the AI responses as with traditional search.

The answers satisfied some analysts; UBS said it maintains its “conviction that AI-related stocks should drive further equity performance,” while CFRA Research said it came away from the quarter “more optimistic” about Google’s core business and that Meta “remains committed to becoming the leading AI lab.” Wedbush Securities’ Dan Ives said Microsoft is “hitting its next phase of monetization on the AI front.”

But that’s as long as they keep growing the products that catapulted them to become the world’s largest tech companies in the first place. Investors are more likely to raise their eyebrows at all this spending if customers start shying away from Meta’s social media apps or Google’s search engine, according to Otto.

“You’re seeing a pressure to accelerate innovation,” said SuRo Capital’s Evan Schlossman. “You have new space in AI that people believe will be extremely valuable, and so there is a rush to sort of fill that void.”

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