Big Tech companies like Microsoft, Alphabet, and Meta are heavily investing in artificial intelligence, despite the high costs, and investors are responding positively. Microsoft's stock rose 4% after announcing a record $30 billion spend in the current quarter, pushing its market value to over $4 trillion. Alphabet also beat revenue expectations and raised its spending forecast by $10 billion to $85 billion for the year.
Microsoft's Azure generated over $75 billion in sales last fiscal year, with Copilot tools having over 100 million users. Around 800 million customers use AI tools across Microsoft's software empire. Investors are optimistic about AI's potential for long-term growth, despite high capital expenditures. Debra Aho Williamson, founder and chief analyst at Sonata Insights, notes that strong core businesses will give these companies more time with investors and provide confidence in their spending.
AI played a significant role in driving demand across internet search, digital advertising, and cloud computing in the April-June quarter, powering revenue growth at tech giants. Meta raised its annual capital expenditure forecast by $2 billion to a range of $66-72 billion, with costs driven by AI efforts expected to push 2026 expense growth rate above 2025's pace. Meta's shares surged 11.5%, adding nearly $200 billion to its market value.
These investments are expected to drive future growth and competitiveness, with AI emerging as a primary growth engine for these tech giants. As the AI landscape continues to evolve, it's clear that Big Tech companies are committed to staying ahead of the curve, even if it means breaking the bank.
