Microsoft and Meta just showed investors they have no plans to slow down their AI investments.
Going into earnings, multiple analyst reports had suggested some Big Tech data center leases were being rethought.
There are a few caveats to Microsoft and Meta’s AI growth story, however.
Is there a let-up in the AI mania? Big Tech doesn’t seem to think so.
Microsoft and Meta this week took turns explaining why they see no sign of weakening interest in the AI they’ve bet their futures on, reporting earnings that appeared to shrug off concerns over recent analyst notes suggesting wobbles in demand.
Meta said it was updating its guidance on capital expenditure for the year to $64-72 billion, up from $60-65 billion.
Meanwhile, Microsoft said its capital expenditure was up from $14 billion in the same quarter last year to $21.4 billion in the most recent quarter.
These are both signs that the two companies are willing to spend more and more on the critical infrastructure needed to host the AI services in high demand from customers.
Microsoft posted cloud unit revenue of $42.4 billion in the first quarter of 2025, beating analyst expectations. Revenue in the unit accounting for the AI data center services it provides to customers jumped 20% year over year.
A Jefferies analyst note, published Thursday, said that “AI demand is trending higher than expected” for Microsoft, pointing to the soaring number of AI tokens the company processed in its third financial quarter.
The updates appeared to have done enough to convince investors that the AI boom is staying strong — Microsoft shares opened up more than 9% on Thursday, while Meta was up about 5% — despite recent reports suggesting a slowdown in demand for Big Tech data centers.
Last week, analysts at Wells Fargo published a report claiming that AI data center giant Amazon had paused some of its data center leasing discussions. In response, an Amazon Web Services executive said there was still “strong demand” to provide the technology underpinning the AI boom.
Microsoft CEO Satya Nadella addressed anxieties about data center pauses in a call with investors on Wednesday, as his company had also been the subject of a report earlier this year claiming that it was canceling lease commitments.
During the call, he said he felt “very, very good” about the pace at which his company’s data center expansion was taking place.
Microsoft’s chief financial officer, Amy Hood, said the company had a “customer contracted backlog of $315 billion” for server technology like graphics processing units, or GPUs.
Google got the ball rolling
Google helped set the stage for both Microsoft and Meta when it reported earnings last week, showing a 28% year-on-year jump in first-quarter revenue in its AI-focused cloud computing unit to $12.3 billion. Capital expenditure also rose from $12 billion year-on-year to $17.2 billion.
All these suggestions that the AI hype train shows no sign of slowing come with a few asterisks, however.
Meta’s increase in full-year guidance on AI infrastructure spending? Some of that is down to rising costs against a backdrop of tariffs, according to Meta’s chief financial officer, Susan Li, who offered a tone of caution to investors on Wednesday.
“The higher cost we expect to incur for infrastructure hardware this year really comes from suppliers who source from countries around the world, and there’s just a lot of uncertainty around this given the ongoing trade discussions,” she said.
Both Google and Microsoft, meanwhile, have shown that while revenue in their cloud units has hit higher and higher targets, there has been a slight decrease in the revenue growth rates at their cloud units over the past two quarters.
Some of this may result from cyclical trends; data centre revenue can sometimes fluctuate throughout the year as companies manage waves of demand.
The other caveat is that the likes of Amazon, Apple, and Nvidia could shift the AI narrative when they report earnings this month.
For now, Big Tech is clear. Demand is still coming for AI, and so too is Big Tech’s spending.
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