Big Tech Ramps Up AI Spending Once More

Four of the tech industry’s most powerful and wealthiest companies — Google, Meta, Microsoft, and Amazon — have made it clear that their massive spending on artificial intelligence (AI) will continue to accelerate, despite mounting concerns that this rapid expansion could be fueling an economic bubble reminiscent of the late-1990s dot-com boom. These companies, already the dominant players in the AI race, are collectively pouring hundreds of billions of dollars into new data centers and computing infrastructure to meet the skyrocketing demand for AI tools and cloud computing power.

Over the past year, the combined capital expenditure of these four companies has exceeded $360 billion — an astonishing amount even by tech industry standards. In the past three months alone, they have spent more than $112 billion, much of it directed toward the construction and expansion of massive data centers. These facilities provide the computing power necessary to train and operate AI models such as chatbots and generative tools that have taken the tech world by storm.

The surge in spending is staggering. Microsoft revealed it had spent $35 billion in the latest quarter, $5 billion more than earlier projections. Meta raised its annual investment outlook to at least $70 billion — nearly double last year’s total. Amazon, meanwhile, said it would be “very aggressive” in expanding its data center footprint, budgeting $125 billion for capital expenditures this year and even more for 2026. Google also announced an additional $6 billion in AI data center investments this year, after already spending close to $64 billion over the past nine months.

These massive financial commitments are driven by relentless demand for AI infrastructure, particularly from corporate clients relying on the cloud computing services of Google Cloud, Amazon Web Services (AWS), and Microsoft Azure. However, even with these vast sums being spent, the companies admit they still do not have enough computing capacity to meet customer demand. Microsoft’s Chief Financial Officer, Amy Hood, remarked that the company had expected to “catch up,” but instead, demand is rising across multiple fronts faster than anticipated.

Despite the optimism from the industry’s giants, concerns about sustainability and risk are growing. The Bank of England recently warned that AI-related investments, particularly those financed by debt, could pose financial dangers if AI fails to deliver the expected economic returns. While large firms like Google and Microsoft are funding expansions largely through profits, the bank noted that smaller companies entering the AI race are taking on more financial risk without comparable resources or steady revenue streams.

Federal Reserve Chair Jerome Powell addressed the issue directly, stating that while AI investment levels are indeed massive, he does not see them as a repeat of the dot-com bubble. Unlike in the 1990s, when speculative startups with unproven ideas drove market enthusiasm, today’s AI growth is being led by highly profitable, established corporations with solid business models. Powell noted that these companies are funding their AI efforts primarily from their own earnings rather than through speculative lending or inflated market valuations.

Still, analysts remain cautious. Many point out that AI, while promising, remains an expensive and largely unproven technology that could take years before yielding consistent returns. Products such as chatbots and generative AI tools have yet to demonstrate sustained profitability, raising questions about how much these companies will ultimately gain.

For now, however, the “Big Four” show no signs of slowing. With a combined $109 billion in operating profit in the last quarter alone, they have the financial power to continue their AI expansion at full throttle — even as the rest of the tech industry and global financial regulators watch closely for signs of overheating in what could be the next great tech-driven economic cycle.