Tech giants pour $155B into AI, outspending US welfare budget
What's the story
In a major development, US tech giants have spent more on artificial intelligence (AI) than the federal government has spent on education, training, employment, and social services in 2025. The companies have invested a whopping $155 billion in AI development for the current fiscal year. This comes as part of an intense competition among Silicon Valley's biggest players to outspend each other in this emerging field.
Financial reports
Tech companies' capex hits tens of billions
Meta, Microsoft, Amazon, and Alphabet (Google's parent) recently released their quarterly public financial reports. The data revealed that their year-to-date capital expenditure (capex), a measure of money spent on acquiring or upgrading physical assets, has already reached tens of billions. Capex is often used as a proxy for tech companies' AI spending due to the massive investments required in physical infrastructure like data centers.
Investment breakdown
Alphabet, Amazon lead the way
Google's recent earnings call revealed that its capital expenditure "primarily reflects investments in servers and data centers to support AI." Meta's year-to-date capex stood at $30.7 billion, double from last year's $15.2 billion during the same period. For the latest quarter alone, the company spent $17 billion on capital expenditures, also double from Q2 2024's $8.5 billion. Alphabet reported nearly $40 billion in capex for the first two quarters of this fiscal year, while Amazon reported a whopping $55.7 billion.
Future expenditure
Microsoft's market capitalization hits $4 trillion
Microsoft has announced plans to spend over $30 billion in the current quarter to build data centers for its AI services. The company's CFO Amy Hood said this quarter's capex would be at least 50% higher than last year's same period and more than their record capital expenditures of $24.2 billion in Q2 2024. After the announcement, Microsoft's market capitalization hit an impressive $4 trillion, a day after its report was released.
Projected expenditure
Projected spending for next fiscal year
For the next fiscal year, big tech's total capex is expected to skyrocket beyond last year's already huge figures. Microsoft plans to spend around $100 billion on AI in the next fiscal year, CEO Satya Nadella announced on Wednesday. Meta intends to invest between $66 billion and $72 billion, while Alphabet has raised its budget from an earlier estimate of $75 billion to $85 billion. Amazon expects spending to reach $100 billion as it invests in Amazon Web Services (AWS).
Comparison
Multibillion-dollar investments dwarf EU defense spending
The projected capex figures from these four tech giants add up to over $400 billion for the coming year, according to The Wall Street Journal. The Journal notes that these multibillion-dollar investments are larger than the European Union's quarterly defense spending. Microsoft, Google, and Meta told Wall Street analysts last quarter their total capex would be higher than previously estimated—much to investors' delight as shares of each company soared after their respective earnings calls.
Increased investment
Apple hints at increased AI spending
Even Apple, known for its cautious approach, has hinted at a major increase in its AI spending next year, either through internal investments or acquisitions. The company's quarterly capex rose to $3.46 billion from last year's $2.15 billion during the same period. CEO Tim Cook said the company was reallocating a "fair number" of employees to focus on AI and that the "heart of our AI strategy" is to increase investments and "embed" AI across all of Apple's devices/platforms.