Big Tech Is Spending More on AI, But Investors Love It

Returns Are Rising, Too

- ADITYA SONI & DEBORAH MARY SOPHIA

BIG TECH IS spending more than ever on artificial intelligence (AI)—but the returns are rising too, and investors are buying in.

AI played a bigger role in driving demand across internet search, digital advertising, and cloud computing in the April–June quarter, powering revenue growth at technology giants Microsoft, Meta, and Alphabet.

Betting that momentum will sustain, Microsoft and Alphabet decided to ramp up spending to ease capacity shortages that have limited their ability to meet soaring AI services demand, even after several quarters of multi-billion-dollar outlays.

The results offer the clearest sign yet that AI is emerging as a primary growth engine, although the monetization journey is still in its early days, investors and analysts said.

The upbeat commentary also bodes well for Amazon.com, the largest US cloud provider, which will report earnings on Thursday after markets close, and underscores how surging demand for the new technology is shielding the tech giants from tariff-driven economic uncertainty hobbling other sectors.

“As companies like Alphabet and Meta race to deliver on the promise of AI, capital expenditures are shockingly high and will remain elevated for the foreseeable future,” said Debra Aho Williamson, founder and chief analyst at Sonata Insights.