Big Tech companies are all in on artificial intelligence (AI), with Meta (META) planning to spend as much as $65 billion on AI infrastructure in 2025. Mizuho Financial Group desk-based analyst Jordan Klein joins Market Domination with Julie Hyman and Josh Lipton to discuss Big Tech’s AI spending.
“I think the phrase is going to be ‘go big or go home,’ especially from these large cloud hyperscalers that are in this proverbial arms race to basically try to get a lead and dominate this new AI market,” Klein says. “Their messaging is that there’s too much to lose here to not spend enough in the early phases.”
While Klein expects these Big Tech companies to continue investing billions into AI, he doesn’t expect their capital expenditures to keep growing at the same rapid pace. “The overall growth rate [is] going to start to moderate … but that being said, again, I think you’re going to see very large numbers for at least this year, probably into next year.”
AI monetization has been a key theme of Big Tech earnings, with Wall Street eager to see when these hefty AI investments will pay off. However, Klein highlights that investors may be less concerned with massive capital expenses as long as growth persists. “Your margins [being] slightly higher as opposed to peaking and coming down will give you the benefit of the doubt,” Klein explains. “[But] as soon as that narrative or that dynamic on top-line growth and margins reverses, it’s game over, meaning they’re not going to get a pass.”
He adds, “Most investors I speak with understand that this doesn’t happen overnight,” explaining that building a large data center is a timely and expensive process.
To watch more expert insights and analysis on the latest market action, check out more Market Domination here.
This post was written by Naomi Buchanan.
#Meta #latest #big #Big #Tech #race
