Meta, Google, and Microsoft Triple Down on AI Spending

While Microsoft did not provide specific AI capital spending forecast for the next quarter or the coming year, the company's CFO Amy Hood said the company's overall spending “will increase sequentially, and we now expect the growth rate in fiscal 2026 to be higher than in fiscal 2025.”

Technology companies are making ambitious plans to increase capital spending on the assumption that demand for AI will only grow. However, some analysts have expressed concerns that The AI ​​market is a bubble and will eventually burst.

These fears are fueled by announcements of extremely expensive, multi-year data center projects and incremental investments. Last month, Nvidia said it would invest “up to $100 billion” in OpenAI if the ChatGPT maker builds and deploys at least 10 gigawatts of artificial intelligence data centers using Nvidia chips. Meanwhile, OpenAI stated: just yesterday that it plans to develop 30 gigawatts of computing resources worth $1.4 trillion.

Microsoft has committed to investing a total of $13 billion in OpenAI and continues to use the company's advanced artificial intelligence models, but has required $3.1 billion Net income suffered in the quarter due to losses on those investments. Microsoft said the ongoing nature of its partnership with OpenAI will lead to increased volatility. Going forward, Hood said the company will exclude any impact from its investment in OpenAI in its financial forecasts.

Microsoft CEO Satya Nadella told analysts there are two “critical” points to consider as the company evaluates its capital spending. First, the company is looking at ways to make its data center fleet “fungible,” meaning they can be easily modified to meet changing customer needs in the future. Secondly, the company plans to constantly upgrade its infrastructure.

“It's not like we buy one version of Nvidia and load up every gigawatt we have. Every year you buy, you're driven by Moore's Law, you're constantly upgrading and depreciating it and using software to improve efficiency,” Nadella said.

Mark Moerdler, a senior research analyst covering global software at Bernstein, says Microsoft “is building capacity in increments over time and can move resources around, which gives them good protection.” But he added: “Is there a general AI bubble? [It’s] it is possible that they did not answer.”