Big Tech’s AI spending spree sparks investor jitters as Meta, Microsoft and Alphabet ramp up costs

The world’s biggest technology firms are spending record sums to fuel the next phase of artificial intelligence growth — but the staggering cost of that ambition is beginning to test investors’ patience.

As per a report by Bloomberg, tech giants Alphabet Inc., Meta Platforms Inc., and Microsoft Corp. collectively spent $78 billion in capital expenditure last quarter, an 89% increase year-on-year, largely driven by the construction of vast data centres and the purchase of GPUs and related infrastructure. Each company also raised its forecast for future spending, unsettling markets accustomed to high—but not unprecedented—levels of investment.

Following their quarterly results on Wednesday, Meta and Microsoft’s shares fell in after-hours trading, with Meta cautioning that its 2026 outlays will be significantly higher than those planned for 2025. While Alphabet’s stock rose by over 6% as investors digested its numbers more positively, the surge in collective spending reignited debates on whether the AI boom is veering into bubble territory, reported Bloomberg.

On an analyst call, Microsoft CFO Amy Hood admitted that despite massive investment, the company is still struggling to meet demand for AI services. Microsoft, which helped ignite the AI race through its $13 billion partnership with OpenAI, reported a record $34.9 billion in capital spending during the September quarter. Although revenue from its Azure cloud division grew robustly, it was not enough to assure investors that such heavy investment would yield faster returns.

At Alphabet, optimism was higher. The company said its Gemini AI assistant now has 650 million monthly active users, up 44% in just three months, and revealed that Google Cloud had secured more billion-dollar contracts in 2025’s first nine months than in the previous two years combined. Cloud revenue rose 34% to $15.2 billion, surpassing expectations, though capital expenditure guidance for 2025 was raised from $85 billion to as much as $93 billion, with a “significant increase” expected in 2026.

For Meta, the picture was more concerning. The company posted a $16 billion tax charge and warned that capital spending would grow “at a significantly faster clip” next year. Unlike Microsoft and Google, Meta lacks a large external cloud business to offset the cost of its AI infrastructure, making its spending spree inherently riskier.

As per Bloomberg, Meta CEO Mark Zuckerberg said the company’s heavy AI investment, used to enhance advertising and power products like AI-driven smart glasses—could eventually be leveraged by selling excess computing capacity to other firms. However, the company’s Reality Labs division, which develops wearable devices, reported a $4.4 billion quarterly loss on just $470 million in revenue.

Despite investor unease, Zuckerberg defended Meta’s aggressive AI push, arguing that the greater risk lies in underinvesting at this stage of the technology cycle.

Investors will gain a clearer view of the cloud and AI ecosystem later this week when Amazon and Apple announce their results. For now, though, Wall Street remains divided — caught between enthusiasm for AI’s transformative promise and apprehension over whether even Silicon Valley’s biggest players may be spending too far, too fast.