Three tech giants just dropped a collective bombshell on Wall Street - Meta, Google, and Microsoft are doubling down on AI infrastructure spending to the tune of hundreds of billions, even as analysts warn the sector might be heading for a bubble. The companies reported record Q3 profits Wednesday while dramatically raising their 2025 capital expenditure forecasts, sending clear signals that the AI arms race is far from over.
Meta CEO Mark Zuckerberg didn't mince words on Wednesday's earnings call - his company is "aggressively front-loading" AI infrastructure to prepare for superintelligence breakthroughs, even if the timeline remains uncertain. The social media giant bumped its 2025 capital expenditure forecast to $70-72 billion, up from a previous range that topped out at $72 billion, with CFO Susan Li warning investors that 2026 spending would be "notably larger." The massive investment comes as Meta reported $51.24 billion in quarterly revenue, up 26% year-over-year, showing the company can afford its AI ambitions. Google parent Alphabet followed with an even bigger shock, raising its 2025 capex guidance to $91-93 billion from an earlier estimate of just $75 billion. The search giant backed up the spending spree with record quarterly revenue of $102.3 billion, up 33% from last year, driven largely by its cloud division which pulled in $15.15 billion - a 35% jump. Google's AI assistant Gemini now boasts 650 million monthly users, up from 450 million last quarter, though it still trails OpenAI's ChatGPT at 800 million weekly users. Microsoft rounded out the trillion-dollar spending announcements with $34.9 billion in quarterly capital expenditures, nearly $5 billion above forecasts and representing a staggering 74% increase from the same period last year. The Redmond giant's $77 billion in quarterly revenue, up 18% annually, helped justify the massive infrastructure investments flowing primarily into AI data centers and computing resources. CFO Amy Hood told analysts that spending would "increase sequentially" with fiscal 2026 growth rates exceeding this year's already historic pace. But Microsoft also revealed the risks of AI betting, taking a $3.1 billion hit from its OpenAI investment losses. The company has pumped $13 billion into the ChatGPT maker and plans to exclude future OpenAI impacts from financial guidance due to volatility. The spending announcements come amid increasingly grandiose industry promises that have some analysts questioning whether AI has become a speculative bubble. said Tuesday it's planning 30 gigawatts of computing resources worth $1.4 trillion, while committed up to $100 billion for data centers using its chips. CEO Satya Nadella defended 's approach by emphasizing "fungible" data centers that can adapt to changing demands and continuous infrastructure modernization. "It's not like we buy one version of Nvidia and load up for all the gigawatts we have," Nadella explained, describing annual hardware refreshes that ride Moore's Law improvements. The companies are betting that AI demand will justify historically unprecedented infrastructure investments, but market watchers see warning signs. Bernstein analyst Mark Moerdler acknowledged 's flexible capacity building provides "a lot of protection" but couldn't rule out an "overall AI bubble." has dramatically restructured its AI teams eight times in recent months while offering researchers compensation packages worth hundreds of millions. The company also cut 600 jobs last week to improve AI team efficiency, highlighting the intense pressure to show returns on massive investments. The earnings reveal how tech giants are essentially making trillion-dollar bets on AI's future without clear visibility into when or how these investments will pay off. While all three companies reported strong current revenue growth, their forward-looking spending commitments assume AI demand will continue climbing exponentially. Wall Street initially rewarded the aggressive spending plans, but bubble concerns aren't going away. The combination of record profits and record capex increases creates an unusual dynamic where success breeds even bigger risks, leaving investors to wonder whether big tech is building the future or just building the next crash.
