Google has announced $75 billion earmarked for capital expenditures in 2025 in its latest earnings report, laying bare the company’s ambitions for expansion in artificial intelligence initiatives. The move highlights the escalating AI arms race among technology giants as Alphabet, Microsoft, Meta, and Amazon compete to dominate the next wave of AI-powered infrastructure and services. […]
Google has announced $75 billion earmarked for capital expenditures in 2025 in its latest earnings report, laying bare the company’s ambitions for expansion in artificial intelligence initiatives.
The move highlights the escalating AI arms race among technology giants as Alphabet, Microsoft, Meta, and Amazon compete to dominate the next wave of AI-powered infrastructure and services.
Wall Street reacts to Google’s AI gamble
Despite Alphabet reporting a 12% increase in revenue for the quarter, investors were less than enthusiastic. Shares fell nearly 10% in after-hours trading, shaken by the unexpected scale of Google’s AI expenditure.
“Turns out even a $2.5 trillion company has off days,” wrote markets journalist Phil Rosen in a LinkedIn post. “Its cloud business in particular fell flat — just as Microsoft’s did a week ago — coming in at $11.96 billion for the quarter, below expectations for $12.19 billion.”
Alphabet’s CEO, Sundar Pichai, defended the investment, arguing that AI infrastructure is the foundation of long-term growth. “We’re in a great rhythm — building, testing and launching products faster than ever before,” Pichai stated in a LinkedIn post.
“Our leadership in AI innovation and our unique full-stack approach is translating into product usage, revenue growth and results.”
The Big Tech AI race
Google’s latest AI model, Gemini 2.0, was also released to the public today, marking another step in its aggressive push into AI-powered services.
But it’s not alone; Microsoft recently announced plans to spend $80bn on AI infrastructure. Meanwhile, Meta and Amazon are also ramping up their AI capabilities, each vying to develop the most advanced AI-driven virtual assistants and cloud solutions.
Microsoft’s investment is largely focused on integrating AI into its cloud computing platform, Azure, and strengthening its partnership with OpenAI.
The company has positioned itself as a leader in generative AI, embedding AI-powered capabilities across its enterprise and consumer products suite.
Meta, on the other hand, is channelling its AI efforts into developing next-generation virtual assistants and AI-driven content generation tools, particularly in its metaverse and social media ecosystems.
With its deep investment in AWS, Amazon is focused on scaling AI-driven services for enterprises, competing directly with Google and Microsoft in the cloud AI space.
Is China’s DeepSeek a disruptor on the horizon?
Adding pressure to US tech giants is China’s DeepSeek, a startup that has developed an AI model reportedly offering high-performance capabilities at a fraction of the cost.
Investors are now questioning whether the enormous sums poured into AI infrastructure by Google and its US competitors are necessary to stay competitive.
Read more: DeepSeek R1: Five key takeaways from GenAI’s “Sputnik moment”
Economist Martine de Bono highlighted this dilemma: “The company is clearly signalling that it disputes claims by Chinese AI lab DeepSeek that its AI is much cheaper and performs just as well as comparable US software programs.”
The rise of DeepSeek illustrates how AI development is no longer the exclusive domain of Silicon Valley. With China making rapid advances in AI, American tech firms face dual competition from each other as well as overseas players challenging their dominance.
Cloud Computing and AI monetisation concerns
While AI remains the focal point of Google’s strategy, its cloud business, once viewed as a high-growth opportunity, has shown signs of slowing.
Google Cloud generated $11.96 billion in Q4, missing expectations and raising concerns about AI’s ability to translate into immediate revenue growth.
“Cloud revenue growth is decelerating, sparking concerns about whether AI-powered cloud services are translating into real business gains,” Gerrard noted.
Alphabet’s core business remains advertising, and AI Overviews in Google Search are already driving higher engagement.
However, the long-term monetisation potential of AI remains uncertain, leaving investors questioning whether Google’s enormous AI bet will pay off.
Despite market jitters, Alphabet is forging ahead with its AI expansion. Gemini 2.0, Google’s latest AI model suite, promises advancements in multimodal capabilities, agentic AI, and cost-efficient processing.
Competitors such as Anthropic, OpenAI, and Meta are pursuing similar agent-based AI systems, signalling that the battle for AI supremacy is far from over.
Read more: Trump’s crypto boom, Google invests in Anthropic
As tech giants race to outspend one another, the coming months will reveal whether Alphabet’s $75bn gamble is a visionary move or an overextension.
As one commentator on LinkedIn puts it: “Investors complaining about Alphabet’s capex spending are thinking too short term — the company has to invest in tech if it’s going to avoid being the next Intel or Yahoo.”
