Big Tech firms—including Amazon, Google, Microsoft, and Meta—plan to spend a combined $300 billion on AI infrastructure in 2025.
While DeepSeek’s claim to fame was its cost efficiency, Big Tech CEOs echoed that falling technology costs actually lead to greater spending on technology.
Big investments show confidence in AI’s future.
+ Amazon CEO Andy Jassy: “What happens is companies will spend a lot less per unit of infrastructure…but then they get excited about what else they could build that they always thought was cost prohibitive before, and they usually end up spending a lot more in total on technology,”
+ “And for that reason, big tech companies have to invest to ensure they have the capacity to, as Pichai said last week, “meet that moment.”” (The Information)
Concentrated AI spending reinforces monopolies, limiting competition and could be a sign of a bubble.
– “former Federal Trade Commission chair Lina Khan (former FTC chair) said “that the tech companies act like a monolith rather than as independent companies competing with each other.”
– “There might be an element of groupthink here, to be sure.” (The Information)
Big Tech is betting that lower AI cost will lead to a significant uptick in demand.
Hence the CapEx spend is a hedge against underinvesting, avoiding the potential to lack the resources to serve customer demand.