The largest technology companies are doubling down on an AI-powered future, investing heavily in massive data center complexes filled with high-performance servers. Alphabet Inc., Meta Platforms Inc., and Microsoft Corp. collectively spent about $78 billion in capital expenditures last quarter, Bloomberg reported, marking an 89% increase from a year earlier. Most of that spending went toward constructing data centers and equipping them with graphics processing units and other specialized hardware.
The surge in spending rattled investors. Meta and Microsoft shares fell in after-hours trading following the disclosure of these expenditures, while Google investors largely absorbed the increase, sending its shares up more than 6% in late trading. Meta also cautioned that its 2026 outlays would be “notably larger” than in 2025. On a call with Microsoft executives, analysts questioned whether the pace of AI spending might signal a bubble, to which Microsoft Chief Financial Officer Amy Hood responded that demand for AI and cloud services continues to outstrip capacity, underscoring the need for further investment.
Microsoft, which helped ignite the AI boom through its $13 billion backing of OpenAI, recorded a record $34.9 billion in capital expenditures in the September quarter. Its Azure cloud division continues to see revenue growth, although the pace remains consistent with prior quarters, leaving some investors wanting faster returns on the massive spending. Alphabet provided a more optimistic picture, reporting that its Gemini AI assistant now has 650 million monthly active users, up 44% from three months ago, and that Google Cloud secured more billion-dollar deals in the first nine months of 2025 than in the prior two years combined. Google’s capital expenditures are projected to rise to as much as $93 billion this year, with further increases expected next year.
Meta painted the most striking picture of AI-driven expenditures. In addition to a $16 billion tax charge, the company warned that capital spending would grow at a “significantly faster” pace next year. Unlike Microsoft and Google, Meta is not a major cloud provider to outside customers, making its infrastructure spending riskier. CEO Mark Zuckerberg argued that overbuilding could be mitigated by selling excess computing power to other companies, though the option has not yet been exercised. Meta is also investing heavily in its Reality Labs division, which reported a $4.4 billion loss in the third quarter but is considered a key future growth area with AI-enhanced smart glasses.
Zuckerberg emphasized that underinvesting in AI poses a greater risk than overspending. “We should be investing a lot more,” he said, highlighting the company’s confidence that AI integration will deliver returns in its core advertising business. Meanwhile, investors await further clarity from Amazon.com Inc. and Apple Inc., which are scheduled to report quarterly results, potentially shedding more light on the trajectory of cloud and AI investments across the tech sector.
