Massive AI spending shows early payoff for Big Tech
The billions of dollars Big Tech has poured into artificial intelligence (AI) development seem to be paying off as companies show they can produce results, earning Wall Street’s stamp of approval for now.
After months of questions about whether major tech firms were overshooting AI spending, Google, Microsoft and Meta are taking a victory lap after outperforming investors’ lofty expectations.
“It’s showing it’s starting to pay off and companies are doubling down,” Wedbush Securities analyst Dan Ives said, adding, “It puts fuel in the engine for tech to rally more in the second half [of the year].”
Major tech firms promised eye-popping investments in AI heading into 2025, as they pushed to build out the data center infrastructure that is expected to underpin the development of frontier AI models — a frenzy reinforced by President Trump’s own AI infrastructure push.
These investments, already under scrutiny because of their sheer size, faced additional pressure earlier this year with the emergence of DeepSeek.
The Chinese AI startup released its R1 model, which it claimed could compete with top American AI models and was developed with a fraction of the infrastructure.
However, the tech giants seem to have quieted critics so far with the results of their spending.
Google kicked off a series of strong tech earnings last week, beating investor expectations with $96 billion in revenue and $28 billion in net income last quarter.
The search giant, which initially planned to invest $75 billion in capital spending this year, also upped the ante with an additional $10 billion investment.
This raised the bar for Microsoft and Meta coming into this week, said Dave Wagner, head of equity and portfolio manager at Aptus Capital Advisors.
Microsoft did not disappoint, reporting $76 billion in revenue and $27 billion in net income last quarter.
The company’s cloud computing platform Azure surpassed $75 billion in revenue for the fiscal year, up 39 percent year-over-year in the last quarter.
It also announced plans to invest another $30 billion in capital spending next quarter, after spending about $88 billion over the past year.
The company’s stock jumped Thursday on the strong earnings report, briefly boosting the company’s market valuation above $4 trillion. It is only the second company in the world to cross the historic threshold, following Nvidia’s lead last month.
Check out the full report at TheHill.com tomorrow.
Welcome to The Hill’s Technology newsletter, I’m Julia Shapero — tracking the latest moves from Capitol Hill to Silicon Valley.
How policy will be impacting the tech sector now and in the future:
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Tesla said Monday it is granting CEO Elon Musk about $29 billion worth of shares as an interim payment, while his existing pay package remains tied up in court. In a letter to shareholders, Tesla Chair Robyn Denholm and board member Kathleen Wilson-Thompson said the electric vehicle (EV) maker is offering 96 million shares to Musk as a “good faith” payment. “[We] are confident that this award will incentivize Elon to …
The Commodity Futures Trading Commission (CFTC) is getting in on the crypto action.
CFTC acting Chair Caroline Pham announced Friday that the agency is launching a “crypto sprint” to begin implementing the recommendations laid out in President Trump’s recent crypto report.
“The CFTC is wasting no time in fulfilling President Trump’s vision to make America the crypto capital of the world,” Pham said in a statement.
The 166-page report from the president’s digital assets working group offered detailed guidance for Congress and federal regulators.
This included directing the CFTC and Securities and Exchange Commission (SEC) to “use their existing authorities to immediately enable the trading of digital assets at the federal level.”
The SEC quickly jumped in, with Chair Paul Atkins announcing a new initiative Thursday called Project Crypto to “enable America’s financial markets to move on-chain.”
While both the SEC and CFTC are expected to oversee digital assets — a division of labor that Congress seeks to codify — the former has been much more active over the past few months.
The SEC has rolled back several Biden-era rules and dismissed numerous lawsuits and investigations against crypto firms. It has also released guidance on various crypto topics, from meme coins to tokenization.
Meanwhile, the CFTC, which is currently down to two of its usual five commissioners, has been quieter.
“We will work closely with SEC Chairman Paul Atkins and Commissioner Hester Peirce to achieve Project Crypto,” Pham added Friday.
“Providing regulatory clarity now and fostering innovation in digital asset markets will deliver on the Administration’s promise to usher in a Golden Age of Crypto.”
Crypto Corner is a daily feature focused on digital currency and its outlook in Washington.
In Other News
Branch out with other reads on The Hill:
Electricity cost concerns grow amid push for more AI data centers
As tech companies race to power data centers to support artificial intelligence services, some Americans are reporting spikes in their electricity bills. The Trump administration recently released an “AI Action Plan,” which vowed to expedite permitting for the construction of energy-intensive data centers. During the unveiling of the plan, President Trump acknowledged the growing need for power to run these centers, which are …
