Big Tech Increases AI Spending Nears $400 Billion Boosting Market Highs

Major tech companies including Microsoft, Meta, Amazon, and Alphabet are significantly increasing their capital expenditures on artificial intelligence infrastructure, with combined spending expected to reach nearly $400 billion this year. This surge in investment is driven by rising demand for AI-powered services in internet search, cloud computing, and digital advertising, which is fueling revenue growth and boosting investor confidence despite macroeconomic uncertainties. Microsoft and Meta have both achieved market capitalizations exceeding $4 trillion and $1.75 trillion, respectively, supported by strong earnings and expanding AI user bases. While Amazon's cloud results have been disappointing, the overall momentum in AI investments is contributing to record highs for the S&P 500 and Nasdaq, reflecting broad market optimism. Analysts note that these large-scale spending efforts are viewed as long-term bets that will sustain growth, with Meta focusing on leveraging AI to improve advertising efficiency and Microsoft capitalizing on enterprise AI adoption. However, questions remain about how effectively consumer-focused companies like Meta can translate their AI expenditures into sustainable profits compared to business-centric players.