Big Tech’s AI Splurge: Billions in Offing

The thrust for artificial intelligence (AI) is accelerating with each passing day. The big tech firms, including Microsoft (MSFT), Alphabet (GOOGL), Meta Platforms (META), Amazon.com (AMZN), and Apple (AAPL), are deploying more and more funds toward AI infrastructure, as indicated by their latest quarterly filings. Specifically, each of them has set massive capital expenditure goals, with the aim to reap significant benefits that AI promises to bring in the future. Let’s take a closer look at how much these big tech companies have spent on AI in the June quarter.

Microsoft (MSFT) – A big supporter and investor of ChatGPT, Microsoft has integrated the OpenAI software into almost all of its products. In Q4 FY24, MSFT spent $13.9 billion on property and equipment, which included cloud and AI-related spending. Nearly 50% of this amount is for data centers, which is expected to generate rewards over the next 15 years, Microsoft CFO Amy Hood noted. Moreover, Hood pointed out that the company expects spending more in Fiscal 2025, toward cloud and AI segments to meet the burgeoning demand. 

Alphabet (GOOGL) – Alphabet has not had an easy way like Microsoft. Alphabet had to build its AI model, Gemini, from scratch and seems to have done a pretty good job so far. For reference, Gemini was used by over 1.5 million developers in Q2. In Q2 FY24, Alphabet spent $13 billion in capex, most of which was directed toward servers and data centers. Alphabet’s CFO Ruth Porat stated that the company expects quarterly capex of $12 billion or more throughout the year. As CEO Sundar Pichai puts it, “When you go through a curve like this, the risk of underinvesting is dramatically greater than the risk of overinvesting.”

Meta Platforms (META) – Meta Platforms reported a capex of $8.5 billion for Q2 FY24, which included investment in network infrastructure, servers, and data centers. The company built its own AI model called Llama and launched its Llama 3.1 version last month. For Fiscal 2024, Meta revised its capex guidance range to $37 to $40 billion from $35-$40 billion, as the company focuses on AI research and product development.

Additionally, CFO Susan Li stated that Meta expects to incur significant capex growth in 2025 to support its AI ambitions. CEO Mark Zuckerberg noted that Llama 4 model will require 10x more compute than Llama 3, with even higher computing power required for future models. Accordingly, Zuckerberg said, “At this point I’d rather risk building capacity before it is needed, rather than too late.”

Amazon.com (AMZN) – Amazon’s cloud service provider, AWS (Amazon Web Service), offers servers, storage, networking, remote computing, email, mobile development, and security services. The company spent a massive $30.5 billion in capex in the first half of 2024. Amazon intends to spend more on capex in the second half of the year, especially toward AWS infrastructure to support both generative AI and non-generative AI workloads.

The company is creating its own AI chatbot, called Metis to compete with ChatGPT. Metis will be powered by Amazon’s own AI model, Olympus. CEO Andy Jassy said in the earnings call, “I think that the reality right now is that while we’re investing a significant amount in the AI space and in infrastructure, we would like to have more capacity than we already have today.”

Apple (AAPL) – Apple spends the least on AI among these big tech firms, as it is not developing its own generative AI model. Instead, the company has planned to integrate ChatGPT into some of its products. Apple recently announced Apple Intelligence, a system built on years of investments and research in AI and machine learning. The launch date of Apple Intelligence Features was recently delayed to October. The company only did a soft launch for developers to test the features and help fix bugs, if any.

After understanding the current and future investments in AI, let’s compare these tech firms using TipRanks’ Stock Comparison tool.

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