Big Tech Companies Ramp Up AI Spending Despite Concerns

Despite the buzz surrounding DeepSeek’s claims of a lower AI budget era, Big Tech companies are not slowing down. Instead, they’re increasing their AI spending plans.

Amazon Announces Massive AI Spending Plan

Amazon is the latest tech giant to announce a massive AI spending plan, with predicted capital expenditures of over $100 billion in 2025. The "vast majority" of this $100 billion will go towards AI capabilities for its cloud division AWS, according to CEO Andy Jassy during Amazon’s fourth-quarter earnings call.

Amazon’s AI Spending Plan

Jassy said that Q4 2024’s capex spending of $26.3 billion is "reasonably representative" of what to expect on an annualized basis in 2025. Multiplying this quarterly spend by four gets a cool $105.2 billion. This is a huge jump from the $78 billion in capex that Amazon spent in 2024.

Amazon Brushes Aside Concerns

Amazon brushed aside concerns about AI getting cheaper, which could harm its revenue. Instead, Jassy argued that lower prices would lead to increased demand for AI. And AWS, which has AI offerings galore, stands to benefit from this trend.

Jassy’s Perspective on AI Spending

Jassy said, "Sometimes people make the assumption that if you’re able to decrease the cost of any type of technology component… that somehow it leads to less total spend in technology. We’ve never seen that to be the case." He compared the boom in AI demand to the early days of the internet and cloud.

Other Big Tech Companies Follow Suit

Other Big Tech companies are making the same point this earnings season, as worries mount about the returns on their skyrocketing AI expenses. Meta CEO Mark Zuckerberg declared last week that the company would spend "hundreds of billions" on AI in the long term, citing rising inference demand across its billions of users.

Meta’s AI Spending Plan

Meta is slated to spend at least $60 billion on capex in 2025, mostly on AI. Meanwhile, Alphabet just boosted its capex for 2025 by a whopping 42% to $75 billion, with CEO Sundar Pichai justifying the spending by saying that decreased AI costs "will make more use cases feasible."

Microsoft Announces AI Data Center Spending

Microsoft announced last month that it would spend $80 billion on AI data centers in 2025 alone. Microsoft CEO Satya Nadella even tweeted the Wikipedia page for Jevons Paradox (the concept in economics that lower prices leads to increased demand) right as the DeepSeek discussion was heating up.

Nadella’s Perspective on AI Spending

Nadella tweeted, "Jevons paradox strikes again! As AI gets more efficient and accessible, we will see its use skyrocket, turning it into a commodity we just can’t get enough of." This sentiment is echoed by other Big Tech companies, who are confident that AI spending will continue to grow.

Conclusion

Whether Jevons Paradox pans out for Big Tech this time remains to be seen. But for now, there’s no signs of any AI spending slowdown just yet. TechCrunch has an AI-focused newsletter! Sign up here to get it in your inbox every Wednesday.